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Roger
Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 31014
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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I am in the state of Florida. I have a joint car loan financed

Customer Question

I am in the state of Florida. I have a joint car loan financed through a credit union. The loan is assigned to me in a divorce decree. I am filing bankruptcy, but am worried about two issues.

1. Cross collateralization as i have other nonsecured debts with the same credit union
2. that the ex wife's credit would be affected by my bankruptcy filing.

Ideally i would like to reaffirm the debt while doing away with the cross collateralization issues. What can I do? I consulted an "attorney" from a bankruptcy mill and could not get an answer that made any sense.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  Roger replied 5 years ago.

Hi - my name is Kirk and I'm a Bankruptcy litigation attorney here to assist you.

1. If the car loan is cross-collateralized with other debts, it is possible to reaffirm only the car loan and discharge the unsecured debts. However, if the car loan is in default at the time of filing, or if the lender refuses to agree, you could lose the vehicle. If you're looking to discharge all of the unsecured loans, the lender is not likely going to be very helpful to you in reaffirming the car loan. You may have to agree to re-affirm some other debt in order to reach a deal.

2. If the the car loan is a joint debt between you and your spouse, you filing bankruptcy will affect her because she will become 100% responsible for the debt after you're discharged. It is also possible that this account will show up on her credit report as delinquent, in bankruptcy, etc.

Customer: replied 5 years ago.
How would it show on her credit report? Would she just continue to pay the loan or would that require the entire balance to be paid at once?
Expert:  Roger replied 5 years ago.
She would continue to pay as usual - the balance would not be due all at once. As long as she keeps paying, nothing will change with the loan.

As for a notation on the credit report, it will likely show that the account is in bankruptcy.

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