ATTORNEYS' BENEFIT

Redemption:

11 USC § 722 provides that a debtor may “REDEEM” personal property intended for personal or household use, from the secured lien holder, by paying the creditor the amount of the debt that is secured. The debtor is not required to pay on the under secured portion of the debt in order to redeem.

As the attorney for the debtor, by offering to provide your client those additional legal services necessary to redeem under Section 722 (ie, motion, hearing and or/agreed court order), you serve the best interest of your client. It may now be your fiduciary duty to offer your legal services (for a reasonable fee) to accomplish a redemption, if your client can benefit economically.

If you would like to see how this process works, simply click on this link.

If you would like to view sample legal forms taken from public records, simply click on this link.

If you would like to request a FREE Good Faith Estimate for your client, simply click on this link.

Replacement:

"Replacement" may not technically be an expressly stated option as it concerns the Debtor and their intentions regarding their secured auto loan debt, as this concerns what the debtor may undertake post-Chapter 7 filing; ie., it does not relate to the assets of the bankruptcy estate. A "Replacement" vehicle is a post-Chapter 7 filing acquired asset, so your client may still benefit by your advice that they consider the benefits of "Surrendering" their existing upside down auto collateral, and consider "Replacement" as the option. The decision by your client to Surrender collateral continues as always in Chapter 7 to remain a Debtor option or intention. Knowing that your client may qualify for a loan from Replacement Financial Services™ may assist you in your representation while you explain your client's options in Chapter 7 regarding secured auto debt.

Here's a list of reasons why your clients could benefit from replacement of their existing vehicle:

1. Their car has too many miles or is not in good condition or reliable, with too many costly repairs or repairs that will be needed, or
2. Their present car payment is too high and they could financially benefit with a less expensive but reliable car, or
3. The existing lender won’t negotiate a fair reaffirmation or redemption value, taking the position that your client must reaffirm, redeem or surrender, threatening repossession; or
4. Your client does not qualify for a redemption loan (ie., perhaps they need to own a more affordable replacement car with lower loan balance and payments), or
5. Your client simply wants to surrender their car and discharge the debt, but only if they are qualified for a loan to have a replacement car, or
6. Your client, despite being in Chapter 7, may qualify for an upgrade in their car needs.

Finally, and perhaps one of the more important reasons for considering a replacement vehicle/loan, is the strength in bargaining position it could afford your client in negotiations with their existing lender for either a fair reaffirmation or fair redemption value; ie., if they can not succeed, they have an alternative, so the existing lender may be more reasonable to your client. The existing lender usually does not want to repossess, but they implement the threat of repossession to obtain the highest value from your client, whether in a reaffirmation or a redemption. With the existing lender knowing that your client really is willing to surrender their car (because your client would be willing to replace it and could qualify for a loan to do so) the existing lender may be more reasonable regarding reaffirmation and redemption options. Because there is a low recovery value to the existing lender who acts on repossession (with the costs of repossession, auction, attorneys fees and related expenses), it is less beneficial to them to hold to unreasonably high collateral valuations, than if they were reasonable with your client on collateral valuations. Replacement as an option for your client gives your client "leverage" in negotiating with the existing lender.

If you would like to request a FREE Good Faith Estimate for your client, simply click on this link.

(Note: Redemption and redemption loans may also apply in cases of “cross-collateralization” loans involving secured and unsecured debt.)