Ch. 7 Car redemption

[sojumbly]

I'm not sure which subforum to post this in:

Does anyone know why Nolo says the following?

"In Chapter 7 bankruptcy, you must decide what to do with your secured debts. If you are not current on your payments, you will probably lose the property."http://www.nolo.com/legal-encycloped...ankruptcy.html

I don't understand why being up-to-date on payments would help with regard to redemption, as long as the redemption process plays out before a relief from stay is granted. Am I missing something?

Anyone have an opinion?

[justbroke]

I don't believe that Nolo mentions redemption when it makes that statement. The problem is that if you were behind on car payments, a Chapter 7 bankruptcy is NOT going to save your car. Now, as to whether redemption is going to work is an entirely different story.

Redemption is an option but it doesn't mean it's going to work. I was able to obtain a redemption loan from 722 Redemption (US Bank), but many others were unsuccessful. If you're unable to obtain the money (borrow from somewhere including maybe a 401(k)), then that option is lost and if you're behind in payments then you're very likely to fall to a repossession.

The basic rule of Chapter 7 bankruptcy is that if you're behind in payments on secured debt at the time you file your petition, you will lose the property unless you have some means to re-negotiate with the lender (very unlikely) or redeem. In this case, reaffirmation is not a real option because you are already in arrears and that would be quite silly.

[sojumbly]

Thanks, that clears up a lot!

Regarding valuation of the car, do you think kbb/edmunds is enough? Or should one hire an appraiser (for $300+)

[justbroke]

For vehicles, it's best to figure out which valuation book your local court and/or Trustee uses. Remember, they use clean retail (except for an actual redemption). I have seen valuations from Kelley Blue Book (KBB), Black Book, Edmunds and others. Black Book and KBB seem to be the leaders in this area and are likely candidates.

Are you trying to do a redemption?

[sojumbly]

Yes, we'd like to file a motion to redeem, so need to give a value of the car. We're hoping to not have to pay an expert appraiser.

[justbroke]

You do not need an expert appraisal for motor vehicles. You need to use a "real" book that you can point to. An internet print is hard to validate, but you could do the valuation on KBB and print the sheet and attach it as "evidence" as to value. The creditor may or may not put up a fight.

You do realize that for a Motion to Redeem, you really need to do this as a first day motion. If this all sounds Greek to you, then you may have some issues with doing a Redemption. Remember, before you file that Motion to Redeem, you need to have financing or a way to pay the value (listed in your Motion to Redeem) in place! You will also need to write the Motion to Redeem with the valuation and the valuation method (along with evidence of value). You need to serve it appropriately! (Service in some Districts require service on the ALL addresses on the Proof of Claim. Also, for corporations, you probably need to also serve an "officer" of the corporation and/or their registered agent.)

A lot of this is procedural and you need to get the procedure correct... especially on service requirements.

[sojumbly]

Ok, thanks! That does sound greek to me, but hopefully not to my lawyer. He recommends getting an appraisal, but I really can't afford it right now. I think I'll go with KBB and hope for the best.

Edmunds' valuation would be way more favorable to me though (about 1.5k less)

[justbroke]

Even with a professional appraisal the creditor may still object to the Redemption motion. I would only get a professional appraisal, on a motor vehicle, if the creditor objects and there is going to be an evidentiary hearing as to value. In my redemption hearing the creditor had used an "old" version of KBB (years old!) and I was able to get them to settle for less than what I had originally put in the motion. There is really no way to tell how the creditor will react, but it's one of two ways; not respond at all, or put up a fight. The question is how much fight is in them. It's usually not worth it, financially, for them to put up much of a fight unless your valuations are way too low.