Legal Question in Bankruptcy in Pennsylvania

Car and Personal Loan from same institution

I understand that we can keep our car and continue making payments after filing bankruptcy however we also have a personal loan from the same credit union. Writing off the loan could cause problems with the car loan I'm sure. Would we ''have'' to write off the personal loan if we filed bankruptcy or could we opt to continue paying on that? We need the car and don't want to have problems since, as I said, both loans are with the same credit union.


Asked on 5/18/04, 6:16 pm

1 Answer from Attorneys
Matthew Nahrgang Nahrgang & Associates, P.C.

Re: Car and Personal Loan from same institution

Generally, a secured loan, such as a car loan, and an unsecured loan, are separate. Consequently, it is legally possible to file bankruptcy and eliminate the one while maintaining the other.

However, on one occasion, and one only, I encountered a creditor who insisted that the loans were cross collateralized and that a default in the one allowed for a default on the other. Ultimately, the creditor backed down, but it is a risk.

Assuming it makes sense for you to file for other reasons, you could list the debt, pay on the car and see how the creditor reacts. If they take the very unusual position that I just described, you can reaffirm the debt with the unsecured portion.

I trust this has been helpful, but feel free to call or E-mail for a free initial consult.

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Answered on 5/19/04, 10:45 am


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