What can I do if a credit union won’t give me the title to my car because they say I defaulted on a different loan?

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What can I do if a credit union won’t give me the title to my car because they say I defaulted on a different loan?

I took out a car loan around 1999 through my works credit union. The car loan was paid off around 2003 but I also had another personal loan through them which I defaulted on after I lost my job there. I’m trying to now sell my car but the credit union won’t give me my title because they said there was a clause in the auto loan that said if I defaulted on any other loan, they can keep my car title. It’s probably been over 6 years since I’ve done anything with these loans, isn’t the statue of limitations expired? Can they keep my title forever?

Asked on October 7, 2010 under Bankruptcy Law, California

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You need to take all the documentation as to your loan to an attorney to review.  From what you have written it sounds as if they are trying to say that the first loan - or the car - was collateral for the second loan, and that does not sound correct.  I think that that portion of the loan document - which is a contract - is "unconscionable" and against public policy.  I think that if you challenge it it will be deemed void.  The Credit Union has rights to collect on the defaulted loan but you have a right to the title to the property for which you paid.  They can not hold it hostage.  Some states have a Credit union Commission to  monitor credit unions formed in their state.  Check and see if California does.  Or call the State Attorney General's Office for uidance.  Good luck.


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