St. Louis Bankruptcy Center

 

Redeeming a Vehicle in a Chapter 7 Bankruptcy

General Bankruptcy Questions, Uncategorized
Chapter 7 allows you to redeem your vehicle

Chapter 7 allows you to redeem your vehicle

One benefit of a chapter 7 bankruptcy is the option to redeem a vehicle. In order to keep your vehicle after a chapter 7 bankruptcy, you must continue to make your normal car payment. Many people who file a chapter 7 bankruptcy owe much more than the value of their vehicle and continuing to make these monthly payments after a bankruptcy hinders their ability to make a fresh start. Under the federal bankruptcy laws, a person who files a chapter 7 bankruptcy has the option to redeem any debts attached to collateral. Redeeming means to pay to the creditor the lump sum value of the collateral instead of paying the full amount of the debt. This rule applies to vehicles and may be helpful to a person who owes more on a vehicle than what the vehicle is worth.

Redeeming property in a chapter 7 bankruptcy can be helpful if funds are available to pay the value of the collateral, but this is usually not the case. St. Louis Bankruptcy Center can provide other options for redeeming a vehicle including financing a redemption. This process replaces the current vehicle loan with a new loan for the value of the property. For example, if a vehicle is worth $10,000.00 and there is a loan on the vehicle for $20,000.00, a redemption loan would replace the $20,000.00 loan with a $10,000.00 loan. In this way, a redemption can potentially save you thousands of dollars.

To learn more about the option to redeem your vehicle in a chapter 7 bankruptcy, call our law firm today.

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