Debtor May Extend the Time to Redeem Property

By NJ lawyer, Bruce C. Truesdale

Debtor may extend the time to redeem property by use of § 108(b)

Section 108(b) may be used by a debtor in a Chapter 13 case to extend the time to redeem property that may have already been sold at a foreclosure or tax sale.

Section 108(b) provides: “if applicable nonbankruptcy law, [or] an order entered in a nonbankruptcy proceeding, . . . fixes a period within which the debtor or an individual protected under section 1201 or 1301 of this title may . . . cure a default, or perform any other similar act, and such period has not expired before the date of the filing of the petition, the trustee may only file, cure, or perform, as the case may be, before the later of . . . (2) 60 days after the order for relief.” If the bankruptcy petition if filed before the expiration of the redemption period, 108(b) provides an additional 60 days in which to redeem.

One reading § 108(b) my see by it’s terms that it only applies to the trustee. However, a review of § 1303 will find that § 1303 provides the chapter 13 debtor the powers of the trustee to lease, sell or use property of the bankruptcy estate. Many courts have found that a right to redeem is a property interest and thus property of the estate. Section 1306(b) provides that a chapter 13 debtor remains in possession of property of the bankruptcy estate. Taken as a whole, the aforementioned provisions would allow the extension of the time provided by § 108(b) to be available to the chapter 13 debtor. It stands to reason that if a debtor can exercise the rights of a trustee to redeem, the debtor would enjoy the same right to extend the time to redeem as the trustee would have by virtue of § 108(b).