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Cross Collateralization and Credit Unions - How Do They Assert Their Rights?
What specifically did the debtor reaffirm in the reaff agreement? The
credit union has the right to collect the reaffirmed debt against debtor
as if he never filed BK (that is what reaffirming does). If debtor
fails to pay it the credit union can pursue any collateral they have a
perfected lien on.
Shannon A. Doyle, Esq.
Borowitz & Clark, LLP
100 N. Barranca Ave., Ste. 250
West Covina, CA 91791-1600
(626) 646-2555 Phone
(626) 332-8644 Fax
sdoyle@blclaw.com
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I don't think so. They could assert that as to prepetition property,
but not postpetition property. At least that's my initial take on it.
If the tax refund is postpetition property is the first part of the
analysis you want to be sure about.
The debt was discharged, so there is no debt at the time the arising of
the enforcement of the credit union's collateral rights.
Btw, I routinely get a waiver of collateral rights on the item being
reaffirmed with credit unions. Your client has a future fight on
his/her hands as to them releasing the car or whatever the collateral
was that you reaffirmed the debt on. I know this debtor was pro se, and
you probably know this, but figured it was worth mentioning again
despite the fact it has been mentioned on this list server often. It is
something I learned from participation with this list serve.
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When/how does a credit union assert its right to cross collateralize?
I have a case where a client entered into a pro se reaffirmation agreement
with credit union. No mention of any cross collateralization issue at time
client negotiated reaffirmation. Reaffirmation agreement was approved -
Debtor received discharge - case was closed.
Now - Debtor receives 2009 tax refund that was automatically deposited into
account with same credit union. Credit union is holding on to the tax
refund and applying it to an unsecured debt of theirs that was discharged in
the chapter 7. They are claiming that cross-collateralization allows them
to apply the tax refund to the credit card that was discharged.
Is this proper?
Donny Brand
Brand & Spellman PC
3836 E. Anaheim St.
Long Beach, CA 90804
562-438-7500
888-99-BKRPT (888-992-5778)
www.brandspellman.com
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When/how does a credit union assert its right to cross
collateralize?
I have a case where a client entered into a pro se
reaffirmation agreement with credit union. No mention of any cross
collateralization issue at time client negotiated reaffirmation. Reaffirmation
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