Retain the Property and Redeem It – Redeeming the property involves paying the creditor the retail value of the property at the time you filed for bankruptcy, even if you owe more on the property than it is worth. Doing this requires you to file a motion with the bankruptcy court.
Can you file bankruptcy on a secured loan?
Secured debts are treated differently in Chapter 7 bankruptcy than other kinds of debts. Although the secured debt itself can be wiped out (discharged)—and often is—the creditor will still have a right to take the property back if you fail to pay (default on) the payments.
What does it mean to redeem collateral?
Redemption means that a secured debt on some secured collateral (e.g., car, boat, trailer, furniture, etc) can be paid off completely by paying the loan to the fair market value of the collateral, rather than the full loan balance. In the process, the debtor can save literally thousands of dollars.
What are a secured party’s rights on a debtor’s default?
Upon default, a secured party can either take possession of the collateral or render collateral such as equipment unusable, or dispute of collateral on a debtor’s premises under Section 9-1610. A secured party may also collect the collateral by collection whatever may become due on the collateral.
Can a car loan be reaffirmed during bankruptcy?
Others may not, but reaffirming a car loan is the only way to get guaranteed protection against repo during bankruptcy. The chance to continue building your credit: Even if a lender doesn’t repo your vehicle during bankruptcy, they may not continue to report your payments to the credit bureaus.
Can a lender sue if you reaffirm a car loan?
However, the lender won’t be able to sue you for a deficiency balance once the vehicle is sold at auction. On the other hand, if you want to keep the vehicle, most lenders will require you to reaffirm the loan. Reaffirming a car loan involves committing to a restructured contract.
What are the benefits of reaffirming a car loan?
An opportunity to get better loan terms: Most lenders would rather keep you in a loan instead of repossessing the vehicle. So, they may be willing to give you a better interest rate or reduce the size of the loan in order to make reaffirmation more attractive.
What happens if I Surrender my Car Loan?
If you surrender the car, you’ll, of course, forfeit the money you’ve paid toward the loan. However, the lender won’t be able to sue you for a deficiency balance once the vehicle is sold at auction.
