In 2005 I paid off a boat loan with a credit union, I still had loan for a jet ski. The two loans were opened at separate time and unrelated...

Question

In 2005 I paid off a boat loan with a credit union, I still had loan for a jet ski. The two loans were opened at separate time and unrelated. I ran into some tough times and defaulted on that loan. The loan has since been charged off, and the statue of limitations has passed for them to collect. I never received my title for the boat I paid for and now I would like the sell it. I went the the lender to get a letter stating there was no open loan to get the state to send me my title. I was told they are holding it as collateral for the charged off loan, even though they were unrelated. What are my legal rights in getting this title issued to me, I live in Texas incase you need to know.

Thank

D

Answer

Read your contract (or promissory note). This is called "cross-collateralization." It's a dirty little trick that the lenders pull.

It works like this: You have three payments left on your car loan. You go into the lender and get a second loan for a boat. Little did you know that the BOAT loan is now collateralized by a lien on your car AND your boat.