Redemption

Redemption will require you to have a certain amount of cash up front that you can put towards the balance.  Redemption applies to cases where the property value has depreciated to lower than the amount of the loan.  When this happens the creditor is considered under secured. Essentially, to redeem a debt, you make a payment of the current secured value of the debt. 

For example, if a debtor owes 10,000 dollars on a vehicle and the vehicle is now only worth 6,000 dollars, the creditor is under secured by 4,000 dollars.  To redeem this vehicle a debtor would make a payment of 6,000 dollars to the creditor.  Then, through filing for bankruptcy, a debtor can eliminate responsibility for the remaining 4,000 dollars as it is unsecured.  After the bankruptcy the debtor will own the property free and clear. 

Reaffirmation

Another option for individuals filing for bankruptcy is a reaffirmation agreement.  Reaffirmation agreements can be used on any type of property regardless of the value.  Reaffirmation agreements do not require a lump sum payment.  Rather, a reaffirmation agreement is an agreement to continue making payments under the original loan agreement despite the bankruptcy proceeding.  After the bankruptcy the debtor is still financially responsible for the property and will be subject to repossession or foreclosure if the debtor is unable to remain current on the obligation. 

Surrender
When filing for bankruptcy a debtor may also choose to surrender property.  A debtor may surrender property regardless of the value of the property or the current amount of the mortgage or the loan.  This option will require you to turn over the property to the trustee, usually at an arranged time.  Surrender allows you to walk away from the bankruptcy not without any further responsibility or obligation to pay for the property.

If you have questions, or would like more information, schedule an appointment with a St. Louis Bankruptcy Attorney now.