Can we do a redemption loan on our truck to cash out the equity and pay the IRS the taxes we owe?? We are gonna be filing Ch 7.
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Filed Ch 7 - 09/06
Discharged - 12/2006
Officially Declared No Asset - 03/2007
Closed - 04/2007
I am not an attorney. My comments are based on personal experience and research. Always consult an attorney in your area to address concerns related to your particular situation.
Another good thing about being poor is that when you are seventy your children will not have declared you legally insane in order to gain control of your estate. - Woody Allen... -
No. Redemption loan is only for when you owe more than it is worth.
The reasoning behind redemption in ch. 7 is that if you surrender a secured item (when you're upside down on it), the lender is NOT going to be able to resell it for as much as you owed. At best, they'd be able to sell it for what it is presently worth though in reality they'll get even less than that most likely. SO-redemption allows someone in ch. 7 to 'redeem' it by paying what it is worth to the creditor. They don't lose anything, when you consider that they would get that same amount or less if it were surrendered and they had to sell it.
A redemption loan (such as from 722redemption.com) is to pay off the original credition thru a redemption process, so you pay back the lesser amount. (Since most people in ch. 7 don't have a chunk of cash lying around to redeem a vehicle.)Most of my information is from personal experience or HOURS and HOURS of online research. When you're searching online, keep in mind there is no guarantee that the info is completely up to date, and your situation is unique from anyone else's. Do your homework, and consult with an attorney so you can make an informed decision.Comment
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I kinda figured that would be the answer, but you can't blame a gal for trying.
I did find the statute and read it. There's no real statement there saying you can't refi with a redemption loan to pay other debt. While I'm sure that wasn't the intended purpose, there's nothing there to say you can't. It just says the property has to qualify as exemptable, and you can't exceed the current market value of the property being redeemed.
We've pretty well decided to sell the truck anyway. Best to do it ourselves and have control over the money. That way we can be sure the Lender and the IRS get their money without the Trustee taking a cut.Filed Ch 7 - 09/06
Discharged - 12/2006
Officially Declared No Asset - 03/2007
Closed - 04/2007
I am not an attorney. My comments are based on personal experience and research. Always consult an attorney in your area to address concerns related to your particular situation.
Another good thing about being poor is that when you are seventy your children will not have declared you legally insane in order to gain control of your estate. - Woody Allen...Comment
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But the point of redeeming it is to pay the lender what it is worth. If you owe $5000 and it is worth $10,000 - why would you want to pay the lender $10,000?Most of my information is from personal experience or HOURS and HOURS of online research. When you're searching online, keep in mind there is no guarantee that the info is completely up to date, and your situation is unique from anyone else's. Do your homework, and consult with an attorney so you can make an informed decision.Comment
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We wouldn't pay the auto lender the extra. We would send the extra to the IRS to pay our taxes.
But if you can't do it, it doesn't matter anyway.Filed Ch 7 - 09/06
Discharged - 12/2006
Officially Declared No Asset - 03/2007
Closed - 04/2007
I am not an attorney. My comments are based on personal experience and research. Always consult an attorney in your area to address concerns related to your particular situation.
Another good thing about being poor is that when you are seventy your children will not have declared you legally insane in order to gain control of your estate. - Woody Allen...Comment
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