What is the Right of Redemption in a Chapter 7 Personal Bankruptcy?

If you are currently considering a personal bankruptcy filing and you have certain personal assets that have been secured by a lien, an issue that you will want to address with your South Florida bankruptcy attorney is the right of redemption under the United States Bankruptcy Code. The right of redemption, which exists under Section 722 of the Bankruptcy Code, allows debtors to redeem certain types of property in bankruptcy cases when the property has a lien attached to it or another type of legal claim against it. How exactly does this work, and what type of personal property can be redeemed through the right of redemption? Our South Florida personal bankruptcy lawyers can explain in more detail, and we can advise you on the specifics of your property today with regard to your bankruptcy plans.

What is the Right of Redemption Under Section 722 of the Bankruptcy Code?

Section 722 of the Bankruptcy Code states:

“An individual debtor may, whether or not the debtor has waived the right to redeem under this section, redeem tangible personal property intended primarily for personal, family, or household use, from a lien securing a dischargeable consumer debt, if such property is exempted under section 522 of this title or has been abandoned under section 554 of this title, by paying the holder of such lien the amount of the allowed secured claim of such holder that is secured by such lien in full at the time of redemption.”

In more basic terms, if you have tangible personal property tied to a secured debt (for which there is a lien attached), you may be able to redeem the property during your Chapter 7 bankruptcy case. Common examples of tangible personal property redeemed under Section 722 are motor vehicles that are still being paid for and are securing loans, or household furniture for which the debtor has a secured loan.

How the Redemption Process Works

As the Bankruptcy Code explains, there are essentially two ways to redeem property (to exercise your right of redemption) in your Chapter 7 bankruptcy filing:

• Show that the entire value of the tangible personal property is exempt; or
• Pay the bankruptcy court a lump sum that totals the fair market value of the tangible personal property so that you can keep it (and in this circumstance, a portion of the fair market value may be exempt, in which case you would need to pay the remaining amount in a payment to the bankruptcy court).

Contact Our West Palm Beach Bankruptcy Attorneys Today to Learn More About the Right of Redemption in a Business Reorganization Bankruptcy Case

Are you currently considering a personal bankruptcy filing in South Florida? If so, and if you have personal property that has a lien attached, it will be important to discuss the right of redemption under the Bankruptcy Code with your bankruptcy attorney. As we discussed above, in a personal bankruptcy case, you may be able to redeem certain tangible personal property through Section 722 of the Bankruptcy Code. An experienced West Palm Beach bankruptcy lawyer at Kelley Kaplan Delaney & Eller, PLLC can talk to you today to learn more about the details of your assets and your bankruptcy plans, and we can advise you on the right of redemption as we move forward with your bankruptcy filing. Contact us today to get started on your bankruptcy case in South Florida.

Source:

uscode.house.gov/USC-prelim-title11-section722