Personal Bankruptcy Chapter 7 Bankruptcy and Cross Collateral

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bgbear

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I am filing for Chapter 7 and have two vehicle loans, a credit card and a line of credit at one Credit Union. My Credit Union informed my lawyer's office that their loan agreements specifically state that vehicles are used as cross collateral for any loans previously obtained and any future loans obtained with them. We are current on both car loans but they have threatend to reposses the vehicles because the credit card and loc is past due. My lawyer's office is completely clueless about Credit Unions and apparantely I only get one consultation with the lawyer and then only see him again for the bankruptcy hearing. I need to know my options! I have researched and found that if I reaffirm the vehicles and they are paid off the Credit Union will refuse to release the title citing it was collateral for the unsecured debt that was previously discharged in the BK. I have found several members of the same Credit Union that this has happened to in the last year. Obviously, I do not want to pay on vehicles I will never be able to own. If I do not reaffirm, I know I have the option to redeem but is it possible to only redeem one vehicle. Unfortunately, we have equity in both vehicles and from my understanding if we do redeem we would have to pay retail for the vehicle. The one vehicle we can afford to keep has a loan balance just under $6000 but is worth $10,000. Is it possible to redeem and just payoff what is owed on the loan, the $6000? I was able to find the original loan aggreement with the hidden cross collateral clause which is kinda ambigious as I had to read it several times to understand the verbage. Any thoughts would be great! Thanks!
 
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