You may be permitted to “redeem” collateral by making a one-time lump sum payment equivalent to the value of the personal property.
For example, if a debtor owes $10,500 on a car and it is only worth $6,000, if successful on a motion to redeem, the debtor can obtain clear title to the car by paying the creditor $6,000. Most debtors cannot use redemption as a method to retain the collateral due to having to come up with a lump sum of cash. Redemption of consumer items that depreciate rapidly, such as furniture, may also be available. There are also loan companies that may loan a debtor the funds needed to redeem a car. This is usually at a high rate of interest, but since the redemption lowers the principal balance, sometimes, this is financially beneficial to a debtor and can result in a lower payment.
Cross Stone Law is a bankruptcy law firm serving individuals and small businesses. Carol Cross Stone is a bankruptcy attorney who helps people and businesses file for bankruptcy. Carol has practiced law for over 35 years. She limits her practice to bankruptcy.
Under federal law, Cross Stone Law is a debt relief agency. We help individuals and business file for bankruptcy relief under the Bankruptcy Code.