11 Apr Bankruptcy and Your Television
When you file Bankruptcy, all of your property belongs to the bankruptcy estate. You do get a chance to claim some things as exempt and keep them.
But what about property that hasnâ€™t been paid off like a car where you still owe money? Cars are treated differently from most other property, and you can read the excellent posts by my colleagues, Kevin Gipson and Susanne Robicsek.
How about your television? It used to be that you could scrape up a few hundred dollars and buy a good TV for cash. Now, buying a television is a major purchase, and you better be prepared to spend upwards of $1,000 to $2,000 or more. Most of us just use the storeâ€™s finance options and obligate ourselves for a couple of years of payments,
What happens when you file bankruptcy owing such money on your TV (or a â€œrefrigeratorâ€ or â€œstoveâ€ or â€œwasher-dryer,â€ etc.)?
The store still retains a security interest in what you bought. That makes them a secured creditor when you file bankruptcy; and the debt doesnâ€™t simply go away.
Usually, under these circumstances, the store or finance company sends a letter â€œremindingâ€ you that they have the right to repossess the television if you donâ€™t continue to make the payments. Theyâ€™re right. Sort of.
Bankruptcy affords another alternative: the right to redemption. Found in Section 722 of the code, the law allows you to offer the secured party (the store or finance company) the fair market value of the television as payment in full. Since this kind of merchandise depreciates dramatically after you buy it, the value maybe something quite affordable. My guess is that a year old television that you paid $2,000 for isnâ€™t worth more than a couple of hundred dollars today.
So, offer to let them pick it up (they really donâ€™t want it); knowing that if they get pushy you can always file a motion to pay them the couple of hundred dollars that itâ€™s worth and call their bluff.
image credit: dullhunk
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