You can lower your car payment in Chapter 7 bankruptcy by redeeming your car loan.
What Is “Redemption” In Chapter 7 Bankruptcy?
Redemption is a tool available only in a Chapter 7 bankruptcy. It allows you to keep your car by paying fair market value to the creditor, not the amount you actually owe.
How Does Redemption Work?
When you redeem your vehicle, you pay an amount equal to its fair market value. This is often much lower than the amount that remains on your loan. The way this works is as follows: You owe $25,000 on your car, but its fair market value is only $10,000. In Chapter 7 bankruptcy, you can “redeem” your car by paying the lender $10,000 and including the remaining $15,000 balance in the bankruptcy discharge.
722 Redemption Funding
But, you say, “I’m going bankrupt! Where will I get that kind of money to redeem my car?” You can pay the redemption amount by using a company like 722 Redemption Funding, which will pay the redemption amount to your old lender and extend a new loan to you for that amount. I have seen clients cut their car loans in half by working with 722 Redemption.
That’s where an experienced bankruptcy attorney comes in. I can take a look at your complete financial picture and make a recommendation. It’s free to chat with me about your options – you can call or text me at 215.551.7109 or drop me a line.