Can I sell something that is cross-collateralized?

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Can I sell something that is cross-collateralized?

If I have a 30k truck with a 23k loan on it that is cross-collateralized with another personal loan that I co-signed for that is in default. The credit union has threatened repossession even though the vehicle loan is, and always has been, current. I realize the cross-collateralization is strong so I need to sell the truck to rid myself of the payment so I can pay the co-signed loan. So can the credit union claim the 7k difference at the sale of truck or can I keep it to buy another truck with a 7k value?

Asked on June 20, 2012 under Bankruptcy Law, North Carolina

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

From what you have written, you can sell your truck that is cross collaterized IF the secured lender on it is paid its loan in full assuming that is an option. OR, you can sell your truck that has a lien recorded as to it to a third party buyer who is advised of this situation in writing and takes the vehicle by way of the purchase subject to the lien.

From what you have written, the credit union will want to be paid in full in the event you sell your vehicle to a third party based upoin my experience in such matters.


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