What does 722 mean as far as a car

[klandsb]

I was reading on another thread about 722 your car ??? I have a car loan that is paid out of my paycheck to the credit union at work..Someone wrote that credit unions are a pain in the a** to work with... I wanted to keep the car if at all possible... low interest, low pmts ect.... Not sure how this will all pan out but hope for the best....

[optimistic1]

Well, the credit union can moan all they want really, because it will be up to the court to decide.

When you file for a Chapter 7 bankruptcy, you get relief from all of your unsecured debts. The basic rule regarding secured debts is that you must continue to pay your contractual payments in order to keep the collateral. If you want to eliminate a secured debt through bankruptcy, you can, but you must surrender the collateral to the secured creditor. There is a third option that an experienced and knowledgeable bankruptcy attorney can help you with. The third option is called "redemption."

The redemption process in bankruptcy requires the debtor to obtain a court order. The court order typically requires the secured creditor to release its lien against a particular piece of personal property in exchange for a lump sum payment from the debtor. The lump sum payment must equal the current market value of the collateral.

It is important to note that the redemption process only applies to personal property used primarily for household purposes. Examples of personal property used for primarily household purposes include vehicles, furniture, household appliances and household electronics.

The Upside

The main benefit of the redemption process is that you can retain property and pay the creditor less than the full balance on the secured debt. The secured creditor will not be able to repossess the property. Typically, you would owe more on the debt than what the collateral is worth. This is especially true in relation to vehicles, at least for the first couple of years of the loan. For example, if you owe $15,000 on a vehicle that is now worth only $10,000, you would only have to pay your creditor $10,000.

The Downside

The downside is that you must be able to pay the value of the collateral in one, lump sum payment. Most debtors do not have access to enough money to pay a lump sum on a valuable piece of personal property.

Light at the end of the tunnel?

There are lenders that will provide you with a new loan to pay the lump sum at a reduced principal and possible lower interest rate.

Like at this link

http://www.722redemption.com/debtor.aspx

Also, for any Chapter 13 filers, here is another link for the same website, look at what they have to offer, I bookmarked this one, this is a true jackpot!

http://www.722redemption.com/debtor_wrp_ch13.aspxv

[lrprn]

I was reading on another thread about 722 your car ??? ... Someone wrote that credit unions are a pain in the a** to work with... I wanted to keep the car if at all possible... low interest, low pmts ect....

CUs can be a pain to work with during bk *IF* you have cross-collateralized debts (credit cards, home equity loans, etc) with them. If the only loan you have with your CU is your car loan, it's fine to keep it there.

Given that your current car loan is low interest, unless there's some compelling reason to change that (see my cross-collateralized loans comment), it makes no financial sense whatsoever to flip your loan to a 722 loan which will have OUTRAGEOUS interest (like in the upper teens/lower twenties).

Discuss this with your lawyer to see if he/she sees any potential issues with your CU. If there aren't any issues, then stay put with your current car loan.

[optimistic1]

Also, for any Chapter 13 filers, here is another link for the same website, look at what they have to offer, I bookmarked this one, this is a true jackpot!

http://www.722redemption.com/debtor_wrp_ch13.aspxv

That link is broken, here it is again.

http://www.722redemption.com/debtor_wrp_ch13.aspx