What does redemption mean?
In a chapter 7 bankruptcy, the debtor(s) may choose to surrender, reaffirm, or redeem secured debt. If they choose to surrender the personal or real property, they certainly can, and they are forever discharged of that personal debt obligation.
vIf the debtor chooses to keep the property and continue making payments, then the debtor will have to sign a reaffirmation agreement and show proof of the agreement to the bankruptcy court. The debtor does have 60 days to rescind the agrrement if they change their mind.
One final option that is available for personal property only, is to redeem the property. Redemption means if the debtor is able to pay the full value of the property (at replacement value) in one lump sum, then he or she may do so and own the property free and clear of any liens.
Therefore, (hypothetically speaking) if a debtor owes $10,000 on a vehicle and the vehicle is only worth $3,000, then if the the debtor was able to pay a $3000 lump sum value up front to the lender, he or she could and they would own the vehicle outright.
This is very rare because most people who file for bankruptcy are struggling financially and do not have the means available to make such a payment.
If you have questions about Florida Divorces or Bankruptcy Law contact a Florida Attorney
Greg Gilbert
Keith Maynard
