What is 722 Redemption Program?
722 Redemption is a process within the U.S. bankruptcy code under section 11 U.S.C. 722 that allows a debtor to redeem collateral based on the market value of the collateral.
What is vehicle redemption?
Most states give you a right of redemption in the car. What that means is if you pay the entire outstanding balance due on the car loan, you can get the car back. The balance you would need to pay to redeem the vehicle may include extra fees and charges—including repossession and storage fees and even attorneys’ fees.
Can I file chapter7 and keep my car?
If you file for Chapter 7 bankruptcy and local bankruptcy laws allow you to exempt all of the equity you have in your car, you can keep the vehicle—as long as you’re current on your loan payments. They may also give you the option to pay off the equity at a discount in order to keep the car.
How does redemption work in Chapter 7?
Redemption is a tool available only in a Chapter 7 Bankruptcy. It allows you to pay off a loan by paying an amount equal to the value of the loan collateral. However, redemption may not be an option for all Chapter 7 debtors because it requires you to pay off the loan in a lump sum.
What happens after repossession of a vehicle?
Let the car go. Lenders send repossessed cars to auction to help cover part of the cost. Keep in mind you may still owe your lender additional money after it is sold. For example, let’s say your lender was able to sell your car at auction for $10,000, but your loan balance is $15,000.
Can I lower my car payment in Chapter 7?
When you file for Chapter 7, your car loan will not be discharged because it is not an unsecured debt, but rather a secured debt. There is one possibility through Chapter 7 that could decrease what you owe on your car, and that is you may take advantage of your right to redeem your car.
What does it mean to redeem collateral?
Redemption means that a secured debt on some secured collateral (e.g., car, boat, trailer, furniture, etc) can be paid off completely by paying the loan to the fair market value of the collateral, rather than the full loan balance. In the process, the debtor can save literally thousands of dollars.
