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Questions and Answers
What is the purpose of §722 redemption?
What is the purpose of §722 redemption?
- To determine replacement value of assets
- To prevent post-bankruptcy repossession of assets (correct)
- To discharge consumer debts
- To exempt personal property under §522
When is a redemption legally available under §722?
When is a redemption legally available under §722?
- When the property is of inconsequential value to the estate
- When the property is exempted under §522 or abandoned under §554 (correct)
- When the debtor has sufficient equity in the property
- When the creditor agrees to a redemption plan
What does the ch. 7 debtor have to do to redeem the property under §722?
What does the ch. 7 debtor have to do to redeem the property under §722?
- File a reaffirmation agreement
- Surrender the property to the trustee
- Pay the lienholder in cash the amount of the allowed secured claim (correct)
- Negotiate a new repayment plan with the creditor
How is a §722 redemption different than a §524 reaffirmation?
How is a §722 redemption different than a §524 reaffirmation?
Flashcards
What is a §722 redemption?
What is a §722 redemption?
A Chapter 7 debtor can pay off the secured debt in cash to prevent the lienholder from repossessing a secured asset after bankruptcy.
When is a §722 redemption available?
When is a §722 redemption available?
A redemption under §722 is available when the property is either exempted under §522 or abandoned under §554.
What does the debtor have to do to redeem property under §722?
What does the debtor have to do to redeem property under §722?
The debtor must pay the lienholder the full amount of the allowed secured claim in cash.
How does a §722 redemption differ from a §524 reaffirmation?
How does a §722 redemption differ from a §524 reaffirmation?
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Study Notes
§722 Redemption
- §722 redemption allows a debtor to redeem property from a lien or security interest by paying the lienholder the fair market value of the property.
- A redemption is legally available under §722 if the debtor has not reclaimed the property, the trustee has not sold the property, and the property is not subject to a bona fide dispute.
Redemption Process
- To redeem property under §722, the debtor must file a motion with the court, specifying the property to be redeemed, the fair market value of the property, and the amount the debtor is willing to pay.
- The debtor must also tender the redemption amount to the lienholder.
Comparison with §524 Reaffirmation
- A §722 redemption is different from a §524 reaffirmation agreement in that redemption involves paying the lienholder the fair market value of the property, whereas reaffirmation involves agreeing to continue making payments on a debt.
- In a redemption, the debtor becomes the owner of the property free and clear of the lien, whereas in a reaffirmation, the debtor remains liable on the debt.
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Description
Test your knowledge of §722 redemption with this quiz. Learn about the policy of redemption and how it allows debtors to prevent post-bankruptcy repossession of assets such as cars and boats by paying fair market value.
