What is 722 Redemption?
Everything you need to know to understand how to get started.
What is 722 Redemption?
Everything you need to know to understand how to get started.
Your options for dealing with your car in bankruptcy
Reaffirm
Current on your car payments and want things to carry on as if nothing has happened? Reaffirmation is a completely voluntary solution between you and your lender. However, the bankruptcy court must approve reaffirmation via a reaffirmation agreement. Your loan amount and terms most likely will not change in anyway. You’ll keep your car and continue making the regular payments. If you default on your payments in the future, your lender can repossess your car or take other action.
Surrender
Behind on your payments or want a way out of an unreliable car?
You can voluntarily turn the car over to the lender, or make them come get it! You won’t be responsible for any more payments or charges, even if you owe much more than your car is worth.
Redeem
Do you like your car, but just owe to much on it, or need to fix it? If you do owe more than your car is worth Redemption may be your solution. Bankruptcy law allows you to keep your car for its CURRENT "AS IS" VALUE, and not what is OWED to your lender.
A Redemption loan from HHLS will bridge the gap, allowing you to come up with the court required lump sum payment, equivalent to your car’s value, not your remaining balance! This is called redeeming your car, and is by far one of the best ways to save money on your vehicle(s). Redemption is discussed in detail below.
Your options for dealing with your car in bankruptcy
Reaffirm
If you’re current on your car payments, you and your lender can agree to carry on as if the bankruptcy never happened. The bankruptcy court must approve the reaffirmation agreement. You’ll keep your car and continue making the regular payments. If you default on your payments in the future, your lender can repossess your car or take other action.
Surrender
If you’re behind on your payments or want a way out of an unaffordable
loan, you can voluntarily turn the car over to the lender. You won’t be responsible for any more payments or charges, even if you owe much more than your car is worth.
Redeem
If you do owe more than your car is worth, bankruptcy law allows you to pay only the car’s value, not the whole balance. This is called redeeming your car. Redemption is discussed in detail below.
What Does It Mean To Redeem Your Car in Bankruptcy?
When you redeem your car in bankruptcy, you pay the car’s current "AS IS" value instead of the car's
outstanding loan balance! The idea is that if the bankruptcy trustee liquidated your car, your lender
would only be entitled to what they could publicly sell your car for, which is the car's
"Replacement Value".
(Replacement Value is often much less than you loan balance).
So, why is Redemption often referred to as a 722 or 722 Redemption?
Simple... This is due to 11 U.S. Code § 722—Redemption, which grants Chapter 7 debtors the right to redeem
personal property by paying its “replacement value,” as outlined in 11 U.S. Code § 506(a).Section 722 .
Benefits of Redeeming Your Car in Bankruptcy
If you owe more on your car loan than the car is worth, redemption can save you a lot of money.
Not only will you not have to pay the full loan balance, but you also won’t have to pay interest
on that full amount. The difference between the value and loan balance is discharged in your
bankruptcy case, meaning you will never be responsible to pay for it.
What Does It Mean To Redeem Your Car in Bankruptcy?
When you redeem your car in bankruptcy, you pay the car’s value instead of the loan’s
outstanding balance. The idea is that if the bankruptcy trustee liquidated your car, your lender would only be entitled to what they could sell it for at auction: the car's market value (which is often much less than a vehicle's retail value).
So, why is a redemption often referred to as a 722 or a 722 Redemption? Because it’s created by Section 722 of the Federal Bankruptcy Code.
Benefits of Redeeming Your Car in Bankruptcy
If you owe more on your car loan than the car is worth, redemption can save you a lot of money. Not only will you not have to pay the full loan balance, but you also won’t have to pay interest on that full amount. The difference between the value and loan balance is discharged in your bankruptcy case, meaning you're never responsible for paying it.
How Can HHLS Help?
We understand how stressful the Bankruptcy process is on you and your family. For
this reason we will only ask for a few things
Vehicle & Loan Information
HHLS will only ask you for basic vehicle information up front. No personal information is needed for initial approvals.
You will have Zero Obligation to HHLS throughout the entire redemption process
Determine Market Value
HHLS will commission an appraisal to determine your vehicle(s) market value. With your permission we will provide a copy of the appraisal to your Bankruptcy Attorney.
Structure New Loan
HHLS' loan approval will clearly lay out your Redemption loan terms, and compare the redemption loan to your old loan. We will NOT waste your time by approving a loan that will not save you money..
Obtain Court Approval
HHLS will work close with your attorney, who will file a Motion to Redeem. As you wait for court approval HHLS will be there to answer any questions you may have.
Close The Loan Keep Your Car
HHLS will contact you to officially close the loan once the Court has approved your redemption request. HHLS will then send your old lender the court ordered payoff amount.
How Can HHLS Help?
We understand how stressful the Bankruptcy process is on you and your family. For this reason we will only ask for a few things
Vehicle & Loan Information
HHLS will only ask for the most basic info about your car and its loan. We will NOT ask for any personal information up front.
Determine Market Value
HHLS will commission an appraisal on your vehicle to determine its market, and with your permission, we will provide that evidence to your attorney.
Structure New Loan
HHLS will clearly disclose the new redemption loan terms. We will also clearly lay out the savings the proposed redemption loan will have compared to your current loan.
HHLS will never waste your time by trying to sell you on a loan that will not save you money.
Obtain Court Approval
HHLS will work close with your attorney, who will file a Motion to Redeem with the court. While you wait on the courts approval we will be available for any questions or concerns that may arise.
Close The Loan Keep Your Car
HHLS will contact you to close the redemption loan once your attorney gets us the Court order. HHLS will also use that court order to issue an official payoff to your old lender for your vehicle value.
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