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New Contributor
Posts: 82
Registered: ‎04-25-2007
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Can anyone please explain these few terms for me?

Hello everyone, I am meeting with an atty this week and think i have made the decision to file BK. After reading through many posts it seems that i may be a candidate for ch. 7 but even if 13 is all thats available i will go that route.
 
I have heard the terms re-affirm, discharge and redemption in quite a few posts and i was hoping someone would be kind enough to please explain those to me in as much dummy proof as possible...lol...i am just trying to be as much of a sponge as possible but these have been the only things that i havent been able to understand fully.
Established Contributor
Posts: 965
Registered: ‎12-04-2007
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Re: Can anyone please explain these few terms for me?

reaffirm means that you will continue to pay on the debt.  Secured loans (house and car) are reaffirmed.  It also means that if you should default after your BK is done, then you would be responsible on all deficiency balances.  It also means that your lender SHOULD be reporting your on time payments to the credit bureau.  Make sure they do!
 
Redemption is used sometimes if you want to keep a secured debt, like a car, but are way upside down on it or it is a loan held at a credit union where they cross collaterialize their loans, meaning that if you secured and unsecured debt with them, they will say you can't discharge only the unsecured portion because it is "cross collaterialized" with the secured loan.  That isn't true but credit unions are tough.  But to redeem something means that you would pay it off to keep it. For a vehicle there is a program called 722 Redemption that can be done while in your chapter 7 and they pay off your current lender the FMV of your car, and then you make monthly payments to them.  High interest loan but only financing FMV reduced your payment, although you reset the time line on the loan.
 
Discharge means that at the end of your BK all of your debts are discharged, done, gone and no one can come after you to pay for them
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