Redeeming Your Property After you Have Filed Bankruptcy
One common mistake is believing that a bankruptcy will erase all of your debts and you’ll be left with all the stuff you purchased free and clear. This is part of the reason people have bad feelings about people who file bankruptcy and it’s totally not true. While certain debts will be excused, others will not and the creditor is given the choice of repossessing the items you owe for or of excusing the debt. If they decide to take your property you may be able to redeem it.
If your creditor took some of your consumer goods you can buy them back. Now, before you get excited and wonder how in the world you’d buy them back when you just filed bankruptcy because you couldn’t afford them, let us explain. You do not have to buy them back at the amount of the debt but at their current assessed value. Personal property depreciates quickly and often times it suffers the fate of new cars, once you get it off the lot there’s a drastic drop in value. Add this to the fact that you may have owned and used these items quite a bit so they’ve depreciated even more.
If you file a Chapter 7 bankruptcy and are looking to redeem your property after a bankruptcy you’ll have to pay the lender a lump sum within 30 days of the 341 meeting. This can be adjusted but only if the creditor agrees to any changes.
Cars are an interesting situation since they typically are still big ticket items. Some auto lenders have come up with redemption financing which lets you actually finance the amount the vehicle is worth rather than paying it in a lump sum. A bankruptcy attorney will help you work out the details of redemption financing for a vehicle.