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REDEMPTION IN A CHAPTER 7 BANKRUPTCY

REDEMPTION IN A CHAPTER 7 BANKRUPTCY

LEGAL NEWS YOU CAN USE FROM THE DESK OF MICHAEL S. BAILEY, ATTORNEY-AT-LAW.  If you have questions, call me at (513) 631-0022.

A “redemption” allows a debtor in a Chapter 7 bankruptcy to retain personal property (autos, household goods, jewelry, etc.) that is collateral for a secured debt. It’s possible for a debtor in a “redemption” to pay a secured creditor significantly less than the amount of the debt owed the secured creditor. However, the debtor must pay the fair market value of the collateral to the secured creditor.

By way of an example, if a debtor owes a secured creditor $10,000 for an auto and the fair market value of the auto is $4,000, the bankruptcy code permits the debtor in a “redemption” to pay the secured creditor $4,000 while eliminating the remaining balance of $6,000 owed for the secured debt ($10,000 - $4,000). Note that the amount due the secured creditor in a “redemption” must be paid in a lump sum. There are lenders who specifically make loans to debtors to “redeem” an auto or other personal property for a “redemption”.

A “redemption” can realize significant savings for the debtor and allows the debtor to retain the secured collateral while eliminating some debt. Want to know more? Give me a call.

This insight into the law is provided by Michael S. Bailey, Esq. of the law firm of Bailey & Gunderson Co., L.P.A., with offices in Norwood and Western Hills. Phone: (513) 631-0022.

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Copyright © 2017 by Attorneys Bailey & Gunderson Co., L.P.A. All rights reserved. 

5257 Montgomery Rd, Norwood, OH 45212 - Phone: 513-631-0022

Bailey & Gunderson Co., L.P.A., is Cincinnati Family Law. Estate Planning And Bankruptcy Lawyers located in Cincinnati, Ohio, and represents clients across Hamilton County and beyond, in places such as Batavia, Norwood, Western Hills, Anderson Township, Anderson, Amelia, Mason, Harrison and Hamilton. 

Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

 

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