WASHINGTON — CUNA and the North Carolina Credit Union League have stepped in to help Coastal Federal Credit Union argue before the Eastern District Court for North Carolina that members who have entered into bankruptcy should not be allowed to keep driving cars they owe the CU on if the bankruptcy court does not approve their reaffirmation agreements.

The case involves two Coastal FCU members, Landon and Daffney Hardiman, who financed car through Coastal FCU in February 2005 and filed for Chapter 7 bankruptcy in May 2007. As part of the process, for which they had an attorney, the Hardiman's reaffirmed the debt for the car, but their attorney failed to sign the affidavit that the reaffirmation agreement would not cause them undue hardship.

Because of this lack the bankruptcy court held a hearing and refused to approve the reaffirmation agreement but continued to allow the Hardimans to use the car, in a provision which used to be called a “ride through” and which CUNA assistant counsel Mike McLain contended most courts in the country recognize as disallowed under the current bankruptcy law.

CUNA and the League filed the brief in the case in support of a measure which McLain said really protects creditors. “Much of the time, if debtors do not have a reaffirmation agreement in place, even if they keep making payments on the car they often lack the same commitment and responsibility towards the debt and feel free to walk away should something happen to the car or they do not wish to keep it insured et cetera,” McLain said.