Redemption allows an individual debtor (not a partnership or a corporation) to keep tangible, personal property intended primarily for personal, family, or household use by paying the holder of a lien on the property the amount of the allowed secured claim on the property, which typically means the replacement value of the property (the price a retail merchant would charge for property of such kind, considering the age and condition of the property at the time the value is determined) without deduction for costs of sale or marketing. Otherwise, in order to retain the property, the debtor would have to pay the entire amount of the secured creditor’s debt, or enter into a reaffirmation agreement and become legally obligated on the debt again. The property redeemed must be claimed as exempt or abandoned by the trustee.
With redemption, a debtor may be able to, depending on the replacement value of the property, get liens released on personal household possessions for much less than the underlying debt on those secured possessions.
Redemption must be made in one lump sum payment to the creditor. If the debtor and the creditor agree to the redemption, a stipulated order of redemption is required. If the redemption is opposed, a motion for redemption must be filed using LBF #717.20 within 45 days following the first date set for the meeting of creditors.
See LBF #717.10 for procedures.