The value of collateral is often the most important issue between a secured claim holder and the debtor. At confirmation, the debtor who retains property subject to a lien will usually propose to pay the present value of the allowed secured claim through the plan.1 A higher value means greater return to the creditor. A lower value often means smaller monthly payments and a larger deficiency (unsecured) claim that may not be paid in full through the plan.

Bankruptcy Rule 3012 permits a creditor to move for a hearing on the valuation of collateral in advance of or in connection with a hearing on confirmation of a plan. Especially in jurisdictions that delay the hearing on confirmation for any significant period,2 a Bankruptcy Rule 3012 motion can join issue between the secured claim holder and the debtor on all questions of treatment under the plan. A Bankruptcy Rule 3012 motion will often force debtor’s counsel to negotiate to avoid the expense of a trial on valuation and then an objection to confirmation.