§ 53.7     Appear and Be Heard with Respect to the Value of Collateral
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 53.7, at ¶ ____, LundinOnChapter13.com (last visited __________).

The Chapter 13 trustee must appear and be heard at any hearing on the value of property subject to a lien.1 There is much local variation in how the Chapter 13 trustee satisfies this responsibility.


In some jurisdictions, the Chapter 13 trustee makes no independent investigation or valuation of property subject to liens. In other jurisdictions, the Chapter 13 trustee hires an appraiser or has an appraiser on salary who investigates the value of property and offers evidence at any valuation hearing.


The most common property valued in Chapter 13 cases is cars. Chapter 13 trustees often subscribe to publications that value cars. If the value of a car is disputed between the debtor and a creditor, the Chapter 13 trustee can usually offer at least some evidence of value.


Chapter 13 trustees are interested in the value of property subject to liens for several important reasons. The best-interests-of-creditors test at confirmation in § 1325(a)(4)2 requires the trustee to value the property to be distributed under the plan and compare that value to the amount that would be paid if the estate were liquidated under Chapter 7. Property valuation and reduction for the amount of liens is essential to this calculation. Exemptions involve the value of property and, because of the short time period within which an objection to exemptions must be raised,3 the Chapter 13 trustee often has to act quickly to value property that the debtor claims exempt. At confirmation, creditors that retain liens under the plan are entitled to receive the present value of their collateral.4 Valuation of collateral at confirmation is thus essential to constructing the plan and determining whether the plan can be confirmed.


Bankruptcy Rule 3012 permits the valuation of property on motion of any party in interest. This rule is sometimes used in Chapter 13 cases to trigger a valuation hearing in advance of confirmation.5 At any Bankruptcy Rule 3012 hearing in a Chapter 13 case, § 1302(b)(2)(A) requires the trustee to appear and be heard.


1  11 U.S.C. § 1302(b)(2)(A). See discussion of valuation of collateral beginning at § 76.1  Valuation, Claim Splitting and Dewsnup.


2  See § 160.1 [ In General: Plan Payments vs. Hypothetical Liquidation ] § 90.1  In General: Plan Payments vs. Hypothetical Liquidation.


3  See § 49.2 [ Timing and Procedure ] § 48.4  Timing and Procedure.


4  See § 113.1 [ Full Payment of Allowed Secured Claim ] § 78.1  Full Payment of Allowed Secured Claim.


5  See § 67.3 [ Preconfirmation Valuation Disputes ] § 57.6  Preconfirmation Valuation Disputes.