Understanding Bankruptcy Redemption
Good morning, everybody. Edward Kelly here, your OKC bankruptcy attorney, with video two in our little three-part series on redemption. I’m not talking about church redemption, but a motion to redeem in bankruptcy.
You’ll remember from the first video what it is. It’s the power to pay a creditor the value of your collateral against a loan, and then just get rid of the loan and keep the property. Quick recap.
So let’s say you have a car worth $2,000, but you owe $10,000. So you can reaffirm the car, meaning keep it, and then you still have to pay the $10,000 after bankruptcy. You can surrender it, give them the car back, and then the rest of the debt becomes unsecured and goes away like any other debt in Chapter 7, credit card, medical bill, same deal, because you gave up the property.
The Options for Bankruptcy Redemption
Third option, pay the creditor the value of the vehicle. They’re getting exactly what they would get if you surrendered the vehicle. Come up with $2,000, pay them, and the rest of the debt, the $8,000, goes away just like a credit card. That’s what it is. So how does it work in the bankruptcy?
Well, I, as your bankruptcy attorney, and I do charge a little extra for this. This is not a normal part of a bankruptcy, usually between $250 and $500. After the bankruptcy is filed, and I prefer to do this after the trustee has already declared that he doesn’t want any interest in that property, meaning the car. We’ll use the car worth $2,000 with a $10,000 note. We’ll use that as an example. That has no value, but the trustee will do a report of no assets and declare he doesn’t want that, abandoning the property. Once that happens, then we’re in the clear to make the offer to the creditor.
The Process of Bankruptcy Redemption
Usually, I’ll call up the creditor, say, hey, this is what we want to do. We’ll agree on a fair price and then file a motion for redemption. That’s what I do on your behalf, outlining all of this, and then an agreed order. Now, if they won’t agree to anything, we can also have a contested hearing. We could show proof of how much this car is actually worth and then be ready to pay it. And then, of course, you have to make that payment within 30 days of filing the motion, and you need to do all of this through the process of the bankruptcy.
Take Action and Get a Free Consultation
So that’s what it is, how it works, meaning you hire me to do it, pay me a little money, I’ll negotiate with your creditor, hopefully work it out, or if not, we can have a contested hearing, determines the price for my services, and then once it’s done, we pay it off. As always, you can reach me, an Oklahoma bankruptcy redemption lawyer, at oklahomacitybankruptcyattorney.pro.