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Dealing with Secured Auto Loans in Bankruptcy
Bankruptcy offers the option of keeping your secured property by immediately paying it's current replacement value of the object rather than the loan amount. This can be an attractive option for those with auto loans where the value of the car has most likely depreciated faster than the loan balance. However, coming up with the full amount in cash can be difficult if not impossible. In the past few years, a few alternatives have arisen.
Vendors of "Redemption Financing"
The companies listed below specializes in making auto loans to bankrupt debtors seeking the bankruptcy option of "redemption" of their vehicle, whereby the debtor keeps the car by immediately paying the vehicle's current market value (replacement value) rather than the full loan amount over time. These companies will finance a new auto loan (generally through a bank) to produce the cash to pay the redemption amount to your original creditor, and then you pay the redemption amount to the new lender over time. Of course, if you miss payments under the new loan, you'll still lose the vehicle, but at least your monthly payments should be smaller. The new lender takes ownership of the lien on your car. Debtors must have an otherwise good credit history to qualify, and the car must be in good enough condition (i.e. worth enough) to protect the bank's loan.
722 Redemption Financing (via US Bank)
This company specializes in making auto loans (through US Bank) to debtors seeking the option of "redemption" available to those in bankruptcy whereby the debtor can keep a car by paying the current market value (replacement value) of the automobile rather than the loan amount. The company will finance redemption of your existing automobile, or arrange financing for a replacement automobile. Debtors must have an otherwise good credit history to qualify. See the site for more information.
The site has special home pages for debtors, debtors attorneys, creditors, creditors attorneys, bankruptcy trustees, auto dealers.
Of course, if you can't make the payments on this revised amount loan, you'll still lose the car, just to a different lender. So this option is only a solution if you can make the payments on the reduced amount.
Fresh Start Loan Corporation, a Delaware Corporation, dba Redemption Financial Services™ is a duly licensed Consumer Loan Company that began its operations in 1999. The company is now licensed in 12 states*, with licenses pending in 6 states** as of January, 2005.
Paul D. Kirschner, President, General Counsel, Fresh Start Loan Corporation . All employees of Fresh Start Loan Corporation, its loan officers, loan processors, customer service and intake employees are located at our headquarters in Gig Harbor, Washington.
* Licensed in Alaska, Alabama, Arizona, Georgia, Florida, Hawaii, Indiana, Kentucky, Missouri, Oregon, Utah and Washington
** Licenses Pending in California, Illinois, Mississippi, New York, Nevada and Ohio