Nolo's Plain-English Law Dictionary
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- 1) In Chapter 7 bankruptcy, when the debtor obtains legal title to collateral for a debt by paying the creditor the replacement value of the collateral in a lump sum. For example, a debtor may redeem a car note by paying the lender the amount a retail vendor would charge for the car, considering its age and condition. 2) In foreclosure, the homeowner's right (usually granted by state statute), for a certain period of time, to redeem the mortgage and keep the house by refinancing and paying off the original mortgage.