When you file for Chapter 7 bankruptcy, you may be able to keep your secured property if you can pay its current replacement value. Under Section 722 of the bankruptcy code, this process is called “redemption.” If you can meet the requirements of Section 722, you can take advantage of redemption and keep your car or other tangible personal property while saving money.
Essentially, redemption allows you to buy back or pay off your secured property by paying only the current replacement value or the debt left on it, whichever is less. However, you should weigh the advantages and disadvantages to determine if redemption is right for you.
- You can only redeem tangible property. So you cannot use redemption to keep your home.
- Unless you can obtain a redemption loan, you have to pay the replacement value in one lump sum.
Any more questions please contact me at (760)770-4066 for a free consultation.