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Although similar in application, reaffirmation and redemption rights
must be distinguished. Both save nonexempt property from forfeiture by
using two different methods of satisfaction of creditor claims:
- A reaffirmation agreement has the effect of removing an existing
secured debt from discharge for the purpose of retaining collateral in
exchange for a signed agreement acknowledging future liability
for payment.
- Exercising the right of redemption right requires full payment of
a creditor's claim in exchange for a full release of liability.
The court must grant permission for both reaffirmation agreements and
redemption. In most cases, so long as the source of funds is not in
question, courts rarely object to either event.
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