WASHINGTON — CUNA and the North Carolina Credit Union League have submitted arguments to the U.S. District Court for Eastern North Carolina in support of an effort to prevent credit union members who have entered into bankruptcy from keeping cars they owe the CU for if the bankruptcy court does not approve their reaffirmation agreements.

The case involves two members of the $1.8 billion Coastal Federal Credit Union, headquartered in Raleigh, N.C. Landon and Daffney Hardiman financed a 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 Hardimans' 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 under a provision that used to be called a "ride through" and which CUNA Assistant General Counsel Mike McLain contended most courts in the country recognize as disallowed under the current bankruptcy law.