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What is 722 Redemption

The Bankruptcy Code Section 722 authorizes a concept called “redemption.” 11 U.S.C § 722 states in pertinent part:

“An individual debtor may, whether or not the debtor has waived the right to redeem under this section, redeem tangible personal property intended primarily for personal, family, or household use, from a lien securing a dischargeable consumer debt, if such property is exempted under section 522 of this title or has been abandoned under section 554 of this title, by paying the holder of such lien the amount of the allowed secured claim of such holder that is secured by such lien in full at the time of redemption.”

So basically a 722 redemption means that a debtor can “buy back” the vehicle from the bankruptcy estate for an amount equal to the secured portion of the loan. So for example, if your vehicle is worth $10,000 and you have a $19,000 loan, the secured portion of the loan is $10,000 and the unsecured portion is $9,000. You can therefore redeem, or buyback, the vehicle for $10,000.

One downside to the 722 redemption is that the interest rates are often very high, I’ve heard as high as 26%. So carefully examine the terms of the redemption loan to make sure it is in your best interest. I advise clients to put “pencil to paper” and see if it makes financial sense.

From my experience, clients who own expensive cars that depreciate rapidly are the best candidates for a 722 redemption. For example, if you own a BMW or Mercedes that is only worth $25,000 but you owe $50,000—you might be a good candidate—but again, put a pencil to paper.

Who Qualifies for a 722 Redemption?

In order to do a 722 redemption you must have filed a Chapter 7 or Chapter 13 bankruptcy. Also, you must have income that totals at least $1,800 a month, whether from employment or some form of retirement. Additionally, your vehicle must meet certain specifications.

What Vehicles qualify for a 722 Redemption?

In a Chapter 13 bankruptcy you must have owned the vehicle you are trying to redeem for at least 910 days. In a Chapter 7 bankruptcy there is no such waiting period. However, your vehicle must be a 2003 or newer and have less than 140,000 miles. If you would like to file bankruptcy then contact the Dunaway Law Group at 480-389-6529 or message us HERE.

Statement of Intentions in Bankruptcy

With any chapter 7 bankruptcy petition it is required to file a “Statement of Intentions”. This Statement of Intention(s) requires debtors to declare what they intend to do with property connected to their secured debts.

One option on the Statement of Intentions is to reaffirm the debt. Reaffirming a debt means that you agree with a creditor to make yourself liable for the total amount of the debt regardless of the value of the property.

You must act on your specified intentions within 45 days after your 341 hearing. Section § 521(a)(6) of the bankruptcy code states the consequences of failing to act very clearly:

If the debtor fails to so act within the 45-day period referred to in paragraph (6), the stay under sections § 362(a) is terminated with respect to the personal property of the estate or of the debtor which is affected, such property shall no longer be property of the estate, and the creditor may take whatever action as to such property as is permitted by applicable non-bankruptcy law…

If you indicate that you want to reaffirm your debt on your Statement of Intentions, but then never enter into a reaffirmation agreement within 45 days of your creditor’s hearing, the automatic stay is lifted and creditors are free to do as they please within the law. So bottom line: either enter the reaffirmation agreement after seriously considering the potential consequences, or amend your statement of intentions in a way that best serves your interests.

If you need help from an Arizona bankruptcy attorney then email us at clint@dunawaylg.com.

What is a 2004 Examination

Rule 2004 of the Federal Rules of Bankruptcy allows any “interested person” to depose someone who filed bankruptcy. Additionally, the bankruptcy filer must producer documents on matters related to your bankruptcy. The 2004 Exam can cover a broad range of issues, including:

Your actions, conduct or property, your debts and financial condition, any issue that relates to your bankruptcy assets or Chapter 13 plan, and any matter that affects your right to a discharge.

A 2004 Exam is not like a 341 meeting of creditors. It is more formal and involves a more detailed investigation of issues related to your bankruptcy. It is similar to a deposition, sometimes requiring the production of documents. Additionally, 2004 Exams last much longer than a 341 hearing, often lasting several hours.

Rule 2004 Exams are typically held in a law office and not the bankruptcy courthouse. If you are looking for an Arizona bankruptcy then call us at 480-389-6529 or message us HERE.

Objections to Bankruptcy Discharge

Can an interested party object to your discharge?

Bankruptcy Discharge of Debt:

What is a bankruptcy discharge of debt? A discharge is a release of a debtor from personal liability for certain dischargeable debts. A discharge releases a debtor from personal liability for certain debts known as dischargeable debts and prevents the creditors owed those debts from taking any action against the debtor or the debtor’s property to collect the debts. The discharge also prohibits creditors from communicating with the debtor in any form in an attempt to collect on the debt. This includes communication via texts, email, phone calls, letters or person contact.

In a typical Chapter 7 bankruptcy case, a discharge order is entered by the bankruptcy court roughly 70 to 90 days after the § 341 hearing. However, just because a discharge order has been entered doesn’t mean that it can’t be objected to by your Trustee, the United States Trustee, or a Creditor. An Objection to a discharge is very usual, however, there are several common reasons a party will object.

Reasons for Objecting to Discharge

The most common reason for the objection of a chapter 7 bankruptcy discharge is for “fraud or misrepresentation of material facts”. Trustee’s and their staff are very skilled and masters at reading paper trails. They can spot a liar from a mile away. So my advice? Don’t lie! Not only can you lose your discharge but concealing assets in a bankruptcy is a felony and punishable by up to 5 years in prison!

Another common reason a Trustee will revoke a discharge is for failure to provide additional documentation. A Trustee may ask for additional bank statements, pay stubs, tax returns or documentation surrounding a particular transaction. So just because you’ve received your discharge doesn’t mean you can ignore your Trustee. Give him or her exactly what they ask for exactly when they ask for it. The bankruptcy court’s main form of communication is through the mail. So if you move during your bankruptcy let your attorney know so he can file a change of address with the court. Otherwise the Trustee may be sending you letters requesting additional documents and you will not be able to comply.

If you need help from an Arizona bankruptcy attorney then contact the Dunaway Law Group at 480-389-6529 or message us HERE.

* These blog posts are not intended, nor shall they be deemed to render legal advice. Reading these blog post does not create an attorney-client relationship, nor shall it impose an obligation on the part of the law firm to respond to further inquiry.

How Often Can I File Bankruptcy

Determining when you can file bankruptcy for a second time can be somewhat complex and depends on several variables.

First, if you didn’t receive a discharge from your previous bankruptcy then none of the following applies to you. The following rules only apply to individuals who actually received a discharge after successfully completing their bankruptcy.

Chapter 13 bankruptcy to Chapter 13 bankruptcy: There is a 2 year waiting period from the date of discharge. See section 1328(f)(2) of the bankruptcy code to learn more.

Chapter 13 bankruptcy to Chapter 7 bankruptcy: There is a 6 year waiting period from the date of FILING. See section 727(a)(9)- states in part:

“The court shall grant the debtor a discharge, unless, the debtor has been granted a discharge under section 1228 or 1328 of this title, or under section 660 or 661 of the Bankruptcy Act, in a case commenced within six years before the date of the filing of the petition, unless payments under the plan in such case totaled at lease.
(A) 100 percent of the allowed unsecured claims in such case; or
(B)(i) 70% of such claims; and
(B)(ii) the plan was proposed by the debtor in good faith, and the debtor’s best effort.”

Chapter 7 bankruptcy to a Chapter 13 bankruptcy: A person cannot receive a Chapter 13 discharge within 4 years of filing a Chapter 7. See section 1328(f)(1).

Chapter 7 bankruptcy to a Chapter 7 bankruptcy:

A person must wait 8 years from the date of filing. See section 727(a)(8).

Note: If a case is dismissed the debtor can re-file the bankruptcy at anytime. However, the automatic stay of bankruptcy will be lifted within 30 days unless a motion is filed and a hearing is set and held before the 30 days expire. See section 362(c).

As you can see, knowing when you can file bankruptcy again is very complex. Contact an Arizona bankruptcy attorney at the Dunaway Law Group by calling 480-389-6529 or message us HERE.