Hi everyone,
I’m looking for advice for how to go about getting my car title back and settle this debt in the best and most efficient way possible. I understand that I made a lot of mistakes getting to this point so I don’t need any judgment at this point, I’m just trying to fix my life.
A few years ago, my husband and I made a bad house purchase that has ruined us financially. While trying to get out of that situation we ended up going into a lot of debt and maxing credit cards. The credit union that I used to finance my car is also one of the credit cards I maxed out. I just paid off my car, but found out that they won’t release my title until the credit card is paid off. I honestly didn’t even know this was legal. My husband’s friend suggesting requesting a transfer of debt credit card from the current credit union I use now. This would essentially get me the title to the car quicker. I’m in a position where I could make payments if I did this, but I am not sure this is the best way to do it.
I’m in a debt resolution program and actively making payments to pay down all the other debt that I have within the next 5 years. This credit card doesn’t qualify for the program because the credit union is holding onto my title. If they would give me the title of my car, then I could add the debt to the program and have it included in the biweekly payments I’m making.
I am planning on moving back to Canada from the US in about a year, and would need my car title back then, if I’m to bring the car with me.
Any and all (good) advice is greatly appreciated, I’d like to put this all behind me so I can finally move on in life and stop living paycheck to paycheck.
Bank holding my car title due to a charged off credit card.
byu/CommonLiess inpersonalfinance
Posted by CommonLiess
3 Comments
Certainly read your account paperwork, but also securing the credit card debt with your car title was probably buried somewhere in the terms and conditions you unknowingly agreed to. I’d certainly ask your credit union to produce the documentation that gives them the right to do that.
Assuming they can do that, your best bet is to transfer the debt somewhere else, which pays off your credit union, but makes you responsible for the full amount again with an entirely new statute of limitations clock.
**Cross-Collateralization -** This will be in your loan contract and it means the bank can hold on to the title until all debts are paid back.
The biggest question is what it the card worth vs the credit card debt. I am also curious to the debt resolution program as generally they are terrible and just charge huge fees to resolve things you can do on your own and still tank your credit.
Have you considered bankruptcy? As you are in a weird situation and moving out of the country.
Sorry you’re going through this. Your experience spotlights a couple of “gotchas” that most people don’t know to look for.
Never get a credit card issued by the institution where you have checking, savings, and (possibly) brokerage money. If you default on the card – or even just lose a fraud claim – they can reach into your account and just take the money.
Also, never take out a consumer loan (like a car loan) from your mortgage lender. I knew someone who had a mortgage held by a major bank, she had been paying for some time and had about $25K in home equity. She co-signed a car loan for one of her adult kids from the same bank. Kid defaulted on the car loan, co-signer could not afford the payments. The bank essentially forced her to refinance her mortgage to a new, 30-year loan in order to extract as much home equity as possible – to go towards the defaulted car loan. All of her home equity, gone overnight. There was still a deficiency left on the car loan, so the bank wrote it off – and issued a 1099-C, meaning that the forgiven debt was taxable income to her.