Default on Credit Union Car Loan

**willbeteam** · 04-25-2009, 09:10 AM

My question involves an auto loan or repossession in the State of: Alabama. My husband has defaulted on a car loan at the credit union which is in his time only. The credit union states they not only plan to repo the car loan in his name, but also come after the second car loan that is in both of our names although the payments are current. They also state they will make me responsible for the loan balance after the car is sold and any legal fees. Can they do this just because my husband's name is on this loan also although I have not defaulted on this loan or any other loan? Please help!

jk · 04-25-2009, 09:19 AM

Different rules apply to credit unions.

I cannot confirm or refute the ability to do what you have posted but from what I have heard, multiple loans attached to the same member are inter-connected in such a manner as you have stated.

**divemedic** · 04-25-2009, 10:03 AM

What you are talking about is cross collateralization, and is a fairly common practice for credit unions. What they will do is repo your husband's car, and then accelerate your second loan.

Accelerating the loan means that they will demand that you pay the entire note, usually within 30 days. If you cannot or will not, they will repo the second car and bill you for the loan deficiency. The point here is that the credit union wants to limit their risk.

**willbeteam** · 05-03-2009, 06:46 AM

Thank you so much for the information. A couple of days after I posted this question the credit union sent a notice that they were accelerating the loans and were demanding full payment on all accounts. After receiving this notice I went to the dealership and traded in the car. It cost me a couple of thousand to do so, but I was able to finance through the dealership as my credit is still good. The dealership sent the credit union a check for the pay off which they have accepted thus far so I should be out of the loop now. My husband will still have to deal with his portion. He owns his own business so he has suffered a great financial loss as many people have. He has attempted to negotiate with the credit union, but they do not seem to care about doing so with a 5 year customer who has never had this problem in the past. Thanks again for all!