If you wish to use redemption in a
Chapter 7 bankruptcy
you will have to pay the replacement value for your car
or personal property. This may be the wholesale or private sale value.
A Chapter 7 Bankruptcy filing may allow you to get your car from your lender for pennies on the dollar under the bankruptcy law. But redemptions can only be done in a Chapter 7.
In a Chapter 13 you may be able to strip the
lien which is similar to a redemption.
If can only
"strip the lien" in a Chapter 13 if you purchased it more than 910 days ago, use
it commercially or did not purchase it with the auto loan.
When you file a Chapter 7 Bankruptcy in Kentucky think for a minute about whether you want to
1. Surrender your car, and owe nothing.
This may be a good choice if the car is a lemon.
2.
Reaffirm your car with the bank through the court and continue to
pay the bank
the same payments if you owe less than what the auto is worth.
A workout or reaffirmation in Chapter 7
bankruptcy court is a good choice if the lender will agree and:
1) If you owe less than what the wholesale price of the car is and
2) If the interest rate is good and
3) If you are on good terms with the lender. If you are on poor terms with the lender they may reaffirm with you with the intention of taking the car later and suing you for the deficiency after bankruptcy is over.
A workout is normally better and you normally don't want to sign a
reaffirmation agreement.
3. Or redeem your car and buy it from the bank by filing a motion with the court under Chapter 7 for it's
replacement value if you owe more than what it is worth. If you are paying
too much for your car you should file a redemption or surrender it. 722
redemption will often finance it if you don't have the cash to do the
redemption. 722 Redemption saves the average approved person 8,000
dollars. (1-888-721-2800). Personal property like Cars, Boats and Mobile Homes can be
kept for replacement
value.
4. Or perhaps even buy a different car.
The Bankruptcy Manual fully discusses redemptions and reaffirmations. Download your free copy.
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