One of the options for keeping a car in a Chapter 7 Bankruptcy is to redeem the car. In a redemption, you pay the creditor that has the lien on the car the current market value of the car in exchange for the title to the car. You have to pay the creditor in one lump sum which is difficult for most people. However, there are companies that specialize in loaning you the money to pay off the creditor. They will also give you the current market value for the car.
The idea behind a redemption is that if the creditor were to take the car and sell it after you have filed a Chapter 7 bankruptcy, the most that they would be able to recover is the market value of the car. Under bankruptcy law, you can pay the creditor this amount in satisfaction of your debt to them. This can be a good deal for both the creditor and you, especially if you owe far more than the car is worth.
You must file a motion with the Court to redeem a car. In the motion, you must have the current market value of the car and the means by which you will be able to pay the creditor this amount. As I said earlier, there are companies that specialize in obtaining loans for individuals to redeem their cars. However, you should be careful in making this decision. These loans are always high interest rate loans and since the loan is entered into after the bankruptcy, it is not included in your bankruptcy discharge.
For more information on redemption, you can watch my video on redeeming a car.
If you owe more than your car is worth, don't pay hundreds or thousands of dollars more than you need to. Call us today and schedule a free consultation where we can show you how to keep your car and save money on it!