Cross Collateralization Clauses When You File Bankruptcy

Many debtors are unaware when they use that credit union that they might be under Dragnet clause. A Dragnet clause is a cross collateralization to secure property against debts. Many of these clauses are commonly seen in car loans done by credit unions. Attached to this might be a credit card or a line of credit. People going to file bankruptcy and want to keep their car don’t realize that they have to pay off the credit card or credit line also because they’re both secured by the vehicle. This security agreement that you sign is to secure the loan in any other amounts that you now owe or will in the future.