In re Wollin
United States Bankruptcy Court for the District of Oregon
249 B.R. 555 (2000)
Oregon Federal Credit Union (OFCU) (defendant) extended Steven and Cynthia Moody (plaintiffs) a line of credit, a consolidation loan, a Ford F150 vehicle loan (secured by the truck), and a Visa card; separately, OFCU extended Patricia Wollin (plaintiff) a line of credit, a Visa card, and a Ford Probe vehicle loan (secured by that car). Both security agreements contained a 'dragnet' clause — unbeknownst to the debtors — purporting to extend OFCU's security interest in the vehicles to secure all other existing or future debt owed to OFCU. When the Moodys and Wollin filed separate chapter 13 petitions, OFCU asserted its broad security interests under the dragnet clauses; the debtors sought to modify OFCU's claims (which the trustee recommended), and OFCU objected.
Whether a dragnet clause in a security agreement, extending a security interest to all other current or future debt owed to the lender, is enforceable.