§ 74.15     “Adequate Protection” after Confirmation after BAPCPA
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 74.15, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

BAPCPA added two provisions to Chapter 13 dealing with “adequate protection” of secured claim holders: § 1326(a)(1)(C) addresses adequate protection of some lienholders during the period between filing and confirmation;1 § 1325(a)(5)(B)(iii)(II) is aimed at adequate protection of some secured claim holders after confirmation. Section 1325(a)(5)(B)(iii)(II) contains this adequate protection entitlement applicable to plans at confirmation:

(iii) if—

 

  
. . . .
 

 

 

(II) the holder of the claim is secured by personal property, the amount of such payments shall not be less than an amount sufficient to provide to the holder of such claim adequate protection during the period of the plan.2
[2]

The “holder of the claim” in this new subparagraph would be an allowed secured claim provided for by the plan under § 1325(a)(5). Secured by “personal property” is easily understood to mean most collateral except real estate.3

[3]

The reference to “such payments” is less clear. It could be read as a reference to the periodic payments that must be in equal monthly amounts under the immediately preceding subparagraph.4 Reading “such payments” this way limits the adequate protection requirement in § 1325(a)(5)(B)(iii)(II) to personal-property-secured claims that are paid with “periodic payments.” A secured claim provided for in a manner other than periodic payments under § 1325(a)(5)(B)(iii)(I) would not be subject to the adequate protection requirement in § 1325(a)(5)(B)(iii)(II).

[4]

The requirement that periodic payments be sufficient to provide “adequate protection” is troublesome. Adequate protection is defined in § 361 of the Code. In Chapter 13 cases, BAPCPA uses the term of art adequate protection in two new ways that raise the question whether § 361 is the intended source of law.

[5]

Discussed elsewhere,5 BAPCPA added a mandate to § 1326(a)(1)(C) that Chapter 13 debtors make preconfirmation payments to purchase money lenders secured by personal property that provide “adequate protection” for “that portion” of the debt that becomes due after the petition. The notion of adequate protection of a portion of a secured debt challenges well-settled notions of adequate protection under § 361 which focus on depreciation or loss of value caused by preconfirmation use of property or caused by the automatic stay. In § 1325(a)(5)(B)(iii)(II), the drafters of BAPCPA have spun up a third use of adequate protection to describe an entitlement of personal property lienholders after confirmation in a Chapter 13 case.

[6]

We can speculate that new § 1325(a)(5)(B)(iii)(II) is intended to regulate Chapter 13 plans to pay secured claim holders at a rate that keeps pace with depreciation of the collateral. This is not the formulation of adequate protection conveyed by new § 1326(a)(1)(C)—applicable between the Chapter 13 petition and confirmation.

[7]

The possibility that new § 1325(a)(5)(B)(iii)(II) uses adequate protection in the sense of hedging depreciation is speculative because there is no cross-reference to § 361 in new § 1325(a)(5)(B)(iii)(II). Section 361 defines adequate protection when adequate protection “is required under section 362, 363, or 364 of this title.”6 There is no cross-reference to § 1325(a)(5)(B)(iii)(II) in § 361.

[8]

If new § 1325(a)(5)(B)(iii)(II) is interpreted to put a floor under the equal monthly payments that are required by new § 1325(a)(5)(B)(iii)(I),7 then it is imperative that Chapter 13 debtors are able to calculate that minimum amount with some precision for all kinds of personal property. Conventional § 361 adequate protection analysis focuses on the value of collateral and any decrease in value over time that results from the debtor’s use or from the automatic stay. If that is the concept imported into new § 1325(a)(5)(B)(iii)(II), then Chapter 13 plans must provide periodic equal monthly payments that at least equal the decrease in value of the collateral that results each month after confirmation from the debtor’s use of liened personal property.

[9]

For major items of personal property such as cars, it may be possible to generate schedules of the decrease in value from month to month based on the age and condition of the car, the value at confirmation, the value at periodic times after confirmation and the surplus or residual value at the end of the plan. This information is not readily available for all kinds of personal property.

[10]

This calculation will be different from amortization of the allowed amount of a secured claim at confirmation for purposes of calculating the plan payment to an allowed secured claim holder. Amortizations normally assume payment in full by the end of the payment period; depreciation does not follow the same curve nor end in the same place. What valuation standard, depreciation schedule and amortization formula will a bankruptcy court use to calculate adequate protection for a claim secured by a waterbed or a big-screen TV?

[11]

Reminiscent of pre-BAPCPA adequate protection cases,8 the Bankruptcy Court for the Southern District of Texas has determined that adequate protection of a car lender is 1.5 percent of the value of the car per 30-day period.9 The average car in a Chapter 13 case in the Southern District of Texas apparently has a life expectancy of 66 months and depreciates in a straight line—absent proof to the contrary. In the Central District of Illinois, when the debtor was current in payments to the trustee, adequate protection did not fail notwithstanding that payment of attorneys’ fees preempted payments to a car lender for four months after confirmation.10

[12]

And how will the new equal monthly payment rule in § 1325(a)(5)(B)(iii)(I)11 work with the mandate that payments provide adequate protection? It will be pure coincidence if a particular item of personal property decreases in value at exactly the level rate required by equal monthly payments. A car, for example, depreciates more quickly when it is new and more slowly later in life. A car driven 5,000 miles a month depreciates more quickly than a car driven 500 miles a month. The monthly payment required to provide traditional adequate protection during the early months of a Chapter 13 plan would probably be larger for a car than during the later months—but equal payments are the new requirement.

[13]

Lienholders with collateral that decreases in value more rapidly during the early months after confirmation could be entitled by BAPCPA to accelerated repayment of the underlying debt because those larger front-end payments must be maintained throughout the plan. If there will be no value left in the collateral at an intermediate point during the plan, the equal monthly payments continue until the debt is retired. Will the equal monthly payment amount that provides adequate protection be different based on the driving and maintenance habits of different debtors? Perish the thought: designer adequate protection in each Chapter 13 case.

[14]

Some early decisions distinguish the adequate protection payment required by § 1325(a)(5)(B)(iii)(II) from the equal monthly payment rule in the immediately preceding subsection.12 Several courts have concluded that the payments commencing at confirmation must be sufficient to provide adequate protection but need not be in the same amount as the equal monthly payments that begin later and retire the allowed secured claim.13 These cases reason that equal monthly payments required by § 1325(a)(5)(B)(iii)(I) can begin in any month after confirmation so long as an allowed secured claim holder with personal property collateral is adequately protected in the interim.

[15]

During the early months after confirmation, if the required adequate protection payment is less than the equal monthly payment will be, the difference can be used to pay attorneys’ fees.14 These cases create a carve out for the payment of attorneys’ fees. This approach works only when adequate protection is less than the amount necessary to retire the allowed secured claim through the plan. This accommodation of the adequate protection requirement with the equal monthly payment requirement runs into math problems when adequate protection during the early months after confirmation requires a larger payment than the amount necessary to retire the secured claim through the plan.15

[16]

How will payments distributed by the Chapter 13 trustee be allocated for purposes of the new adequate protection requirement? With respect to ordinary lienholders, Chapter 13 debtors will determine the amount of the allowed secured claim and amortize that amount in equal monthly payments over some period of months. That amortization will include interest to provide present value of the allowed amount of the secured claim. Each (equal) monthly distribution by the trustee will include part of the principal amount of the allowed secured claim plus some interest. Is the entire payment available as “adequate protection” or only the portion of each monthly payment that is not interest? By what formula will the principal portion be determined?

[17]

How will the new adequate protection and equal payment requirements work with the new kind of claim described in the hanging sentence at the end of § 1325(a)? Under the sentence dangling at the end of § 1325(a), § 506 “shall not apply” to a purchase money debt incurred within 910 days before the petition when the collateral is a motor vehicle acquired for the personal use of the debtor, or the collateral consists of “any other thing of value” and the debt was incurred within one year before the petition.16 If § 506 “shall not apply,” there is no valuation of the collateral for purposes of determining the claim holder’s entitlement through the plan. Without valuation, any decrease in value cannot be determined for adequate protection purposes. The lienholder described in the hanging sentence may have an allowed claim larger than the value of the collateral. The debtor may be required by the new hanging sentence to pay the allowed claim in full during the plan—in equal monthly payments. Those equal monthly payments must also provide adequate protection; only, without § 506, adequate protection of what is the question not answered by BAPCPA.

[18]

Perhaps examples will help. Assume a Chapter 13 debtor wants to keep a car worth $8,000. The car secures a $10,000 loan. Under pre-BAPCPA rules, the debtor would value the car at $8,000 and pay the $8,000 with present value interest over the life of the plan. In a 60-month plan with 10 percent interest, the car lender would receive a monthly payment of $170 on account of its $8,000 allowed secured claim. The car lender would also have a $2,000 unsecured claim that would be paid whatever percentage the unsecured creditors get under the plan.

[19]

After BAPCPA, assume the debtor purchased the car within 910 days of the petition and that the car lender is otherwise within the class of claims described in the hanging sentence in § 1325(a) with respect to which § 506 shall not apply. The majority interpretation of the hanging sentence would require the plan to pay the car lienholder the present value of the full $10,000 claim over the life of the plan. This would mean payment of $212 per month (with 10 percent interest) in a 60-month plan.17

[20]

But what happens to the “adequate protection” right of the car lender? The car lender will argue that it is entitled to at least the depreciation in value of the car in each month after confirmation. If the car has a four-year life expectancy and will be worth $500 at the end of four years, what will the depreciation schedule look like? Depreciation in the first year after confirmation will be greatest—say, $3,000 or $250 per month. Depreciation will decrease in year two to $2,000 ($167 per month) and to $1,500 ($125 per month) in year three. In year four, there will be a $1,000 decrease in value ($83 per month), leaving $500 of residual value.

[21]

The lienholder will argue that the debtor’s payments under the plan during the first year after confirmation must be at least $250 per month to satisfy the adequate protection requirement in § 1325(a)(5)(B)(iii)(II). Because periodic payments must be in equal monthly amounts under new § 1325(a)(5)(B)(iii)(I), it is arguable that minimum $250 payment must be level for the time necessary to pay the allowed claim in full. In the example, if the plan must provide $250 per month to the car lender, the $10,000 debt will be paid in full with 10 percent interest in 49 months. The debtor will contend that adequate protection payments of $250 per month need only continue for one year and then equal monthly installments begin in an amount sufficient to retire the balance of the debt over the life of the plan.

[22]

There is a complicated calculation buried in here. Arguably, the $250-per-month “adequate protection” payment is “pure principal” that cannot be allocated by the lienholder to postpetition interest. But a 910-day PMSI car claim—according to the majority of reported decisions18—accrues postconfirmation interest at the Till v. SCS Credit Corp.19 rate. In the example, the $250 monthly adequate protection payment would reduce the $10,000 claim, but the declining balance of the claim would accumulate postconfirmation interest. When equal monthly payments begin at some point after confirmation, it is the declining balance plus postconfirmation interest that would have to be retired in equal installments.

[23]

These calculations suggest that an allowed secured claim holder within the hanging sentence in § 1325(a) may use the new adequate protection requirement to increase the (equal) monthly payment to which it is entitled and shorten the payout of its claim through the confirmed plan under some circumstances. Payments to the lienholder will actually exceed the decrease in value on a monthly basis in years two, three and four, but the equal monthly payment requirement would not allow the debtor to reduce monthly payments under the plan without the lienholder’s consent.

[24]

Notice also that this is far better treatment than car lenders typically contract for under nonbankruptcy law and even farther better treatment than the lienholder in the example would realize if the debtor surrendered the $8,000 car. Just imagine what the monthly payment on an ordinary car loan would look like if from the get-go the payment had to exceed depreciation of the car! By some interpretations, BAPCPA gives the special lienholders in the hanging sentence rights in Chapter 13 cases that exceed any reasonable expectation of similar lenders under nonbankruptcy law.

[25]

Mentioned above, some of the early reported decisions interpreting § 1325(a)(5)(B)(iii)(I) and (II) find an accommodation that allows the equal monthly payment to satisfy the adequate protection requirement whenever the equal monthly payment is greater than depreciation. Even with respect to a 910-day PMSI car claim, when the equal monthly payment necessary to retire the claim in full during the plan equals or exceeds depreciation of the collateral, that equal monthly payment satisfies both subsections (I) and (II) in § 1325(a)(5)(B)(iii).20

[26]

This discussion assumes that adequate protection in new § 1325(a)(5)(B)(iii)(II) bears some relationship to the traditional notion in § 361. There is a second assumption that valuation can be used to determine adequate protection rights even with respect to a claim that falls within the hanging sentence at the end of § 1325(a). This raises another set of questions, perhaps the headache level.

[27]

Detailed elsewhere,21 § 506 was amended by BAPCPA to provide a statutory standard for the valuation of personal property in Chapter 13 cases. To determine adequate protection rights under § 361, the traditional approach values the collateral over time to determine the decrease in value from the debtor’s use. The valuation standards specified in § 506(a)(2) would be the logical source of rules to value personal property for adequate protection purposes in a Chapter 13 case. But if the collateral is described in the hanging sentence in § 1325(a), § 506 shall not apply. Where then do we look for a valuation standard for purposes of adequate protection under § 1325(a)(5)(B)(iii)(II)? The law of unintended consequences at work.

[28]

As illustrated above, the new adequate protection requirement will work in tandem with the equal monthly payment requirement to produce outcomes that are economically disadvantageous to Chapter 13 debtors whenever depreciating collateral will require the debtor to make larger monthly payments than ordinary debt amortization would require at confirmation. Once again, debtor’s counsel should be prepared to advise the debtor that surrender of collateral makes more sense than complying with the new rules for confirmation with respect to some secured claims.22

[29]

Purposefully left out of the example above is the new requirement in § 1326(a)(1)(C) that Chapter 13 debtors make a different kind of adequate protection payment between the petition and confirmation. The preconfirmation payment is described as adequate protection of that portion of the obligation that becomes due after the petition with respect to purchase money security interests and personal property.23 The formulations of adequate protection in § 1326(a)(1)(C) and in § 1325(a)(5)(B)(iii)(II) are different and the amounts calculated under the two sections could be different.

[30]

At confirmation, the debtor with help from the Chapter 13 trustee will have to properly credit preconfirmation adequate protection payments against the lienholder’s claim before calculating the equal monthly payments that will be necessary after confirmation to both provide adequate protection and pay the allowed secured claim under § 1325(a)(5).

[31]

The car example above changes if the lender does not fall within the hanging sentence at end of § 1325(a). Assume the car was purchased more than 910 days before the petition. The debtor would cram down the $10,000 claim to an $8,000 secured claim and a $2,000 unsecured claim. The ordinary amortization of $8,000 over 60 months with 10 percent interest produces a monthly payment of $170. That $170 monthly payment would not be sufficient to provide adequate protection of the § 361 variety because the car will depreciate by $3,000 ($250 per month) in the first year after confirmation. If the $250 per month amount is the minimum that the debtor can pay to satisfy § 1325(a)(5)(B)(iii)(II), then the confirmation entitlement of the lienholder may be equal monthly payments of $250. Keeping the same 10 percent present value component, a $250-per-month level payment would retire the $8,000 value of the car in a little more than 37 months—just over half-way through the 60-month plan. This same logic and outcome would apply to a protected 910-day PMSI car claim when monthly depreciation exceeds the equal monthly payment necessary to pay the debt in full during the life of the plan.

[32]

This example illustrates again that the new adequate protection requirement in § 1325(a)(5)(B)(iii)(II) has significant economic consequences for the construction of Chapter 13 plans that retain depreciating collateral. The more rapid the depreciation after confirmation, the higher the monthly payment that may be necessary to satisfy the equal payment requirement. The result is a substantial increase in the “front-loading” of the payment of debt secured by depreciating personal property in Chapter 13 cases. This is the new world of BAPCPA.

[33]

There will be battles about the nature of the claim that results when adequate protection required by § 1325(a)(5)(B)(iii)(II) is not paid after confirmation.24 Lienholders will argue that the entitlement to adequate protection in § 1325(a)(5)(B)(iii)(II) is an expense of administration in a Chapter 13 case that generates a priority claim under §§ 503(b) and 507(a) and when adequate protection “fails,” superpriority results under § 507(b). Prior to BAPCPA, lienholders in Chapter 13 cases rarely succeeded with similar arguments because the predicates to priority and superpriority were not present—there is no postpetition transaction with the debtor; benefit to the estate requires more than just an unpaid secured claim; and adequate protection was rarely requested under § 362, 363 or 364 in a Chapter 13 case for purposes of § 507(b).25

[34]

In a post-BAPCPA decision, one bankruptcy court has preemptively declared that the adequate protection entitlement of a car lender in § 1325(a)(5)(B)(iii)(II) is an expense of administration under § 503(b) entitled to superpriority under § 507(b) in the event of default under the plan.26 This is a controversial conclusion27 sure to be tested—perhaps when a lienholder competes with the debtor’s attorney and others for distribution of funds held by the Chapter 13 trustee at conversion or dismissal.28


 

1  See 11 U.S.C. § 1326(a)(1)(C), discussed in §§ 401.1 [ Preconfirmation Payments ] § 44.6  Preconfirmation Payments after BAPCPA and 404.1 [ Adequate Protection before Confirmation ] § 47.2  Preconfirmation Adequate Protection after BAPCPA.

 

2  11 U.S.C. § 1325(a)(5)(B)(iii)(II).

 

3  See In re Hill, No. 06-80502, 2007 WL 499622, at *6 (Bankr. M.D.N.C. Feb. 12, 2007) (“When the collateral is real property, subsection (II) does not apply and no adequate protection payments are required by Section 1325(a)(5)(B).”).

 

4  See 11 U.S.C. § 1325(a)(5)(B)(iii)(I), discussed in § 448.1 [ Equal Monthly Installments ] § 74.14  Equal Monthly Installments after BAPCPA.

 

5  See 11 U.S.C. § 1326(a)(1)(C), discussed in §§ 401.1 [ Preconfirmation Payments ] § 44.6  Preconfirmation Payments after BAPCPA and 404.1 [ Adequate Protection before Confirmation ] § 47.2  Preconfirmation Adequate Protection after BAPCPA.

 

6  11 U.S.C. § 361.

 

7  See § 448.1 [ Equal Monthly Installments ] § 74.14  Equal Monthly Installments after BAPCPA.

 

8  See § 48.1 [ Adequate Protection of Lienholders prior to Confirmation ] § 47.1  Adequate Protection of Lienholders before Confirmation.

 

9  In re DeSardi, 340 B.R. 790 (Bankr. S.D. Tex. 2006).

 

10  In re Carter, No. 06-90141, 2006 WL 3377032, at *2 (Bankr. C.D. Ill. Nov. 20, 2006) (Ford Motor Credit not entitled to stay relief when it received no payments for four months after confirmation but debtor was current in payments to trustee. In Chapter 13 case filed on February 16, 2006, plan confirmed on May 9, 2006, required payments to Ford of $147.54 per month for 60 months. Ford moved for relief from stay on September 6, 2006, because it had not received any payments. “[T]here has been no default by the Debtor. . . . [T]he Debtor is current in her payments to the Trustee. The lack of payment on Ford Motor Credit Company’s secured claim to date results from the long-standing practice in this District of allowing Chapter 13 Trustee’s [sic] to pay certain administrative claims in full prior to making distributions to secured creditors. Once the administrative claims have been paid, the Chapter 13 Trustee will begin distributing an amount to Ford Motor Credit Company which will actually exceed the monthly payment stated in the Debtor’s Amended Chapter 13 Plan until such time as any post-confirmation arrearages on the secured claim are cured in full. . . . Ford Motor Credit Company has failed to establish lack of adequate protection pursuant to 11 U.S.C. § 362(d)(1). Although Movant has not yet begun receiving payments through the Chapter 13 Trustee, the record reflects that the Debtor is current on her payments to the Trustee. Additionally, the Movant continues to have a perfected security interest on the Debtor’s vehicle which will remain in place until such time as Movant’s secured claim is paid in full, plus interest. All of the facts and circumstances known at present point to Debtor’s successful completion of her confirmed plan.”).

 

11  See § 448.1 [ Equal Monthly Installments ] § 74.14  Equal Monthly Installments after BAPCPA.

 

12  See §§ 442.1 [ Attorney Fees after BAPCPA ] § 73.9  Attorney Fees after BAPCPA and 448.1 [ Equal Monthly Installments ] § 74.14  Equal Monthly Installments after BAPCPA.

 

13  See § 448.1 [ Equal Monthly Installments ] § 74.14  Equal Monthly Installments after BAPCPA. See, e.g., In re Hill, No. 06- 80502, 2007 WL 499622, at *6–*7 (Bankr. M.D.N.C. Feb. 12, 2007) (“When the collateral in question is ‘personal property,’ [§ 1325(a)(5)(B)(iii)(I) and § 1325(a)(5)(B)(iii)(II)] must be read together; they require ‘equal monthly payments’ to be made monthly, in equal amounts, and at the minimum level to afford the secured creditor adequate protection. . . . [P]arsing Section 1325(a)(5)(B)(iii)(II) demonstrates that the phrase ‘during the period of the plan’ modifies ‘adequate protection,’ not ‘such payments.’ . . . This Court agrees with [In re DeSardi, 340 B.R. 790 (Bankr. S.D. Tex. 2006),] . . . that the amount of the adequate protection payments do [sic] not need to be the same as the equal monthly payments. The only requirement is that the equal monthly payments be in an amount sufficient to provide adequate protection. . . . [I]n most instances, the equal monthly payments will be greater than the adequate protection payments.”); In re DeSardi, 340 B.R. 790, 805 (Bankr. S.D. Tex. 2006) (Adequate protection required by § 1325(a)(5)(B)(iii)(II) is different from equal payments required by § 1325(a)(5)(B)(iii)(I); adequate protection required by § 1325(a)(5)(B)(iii)(II) does not determine amount of equal installments through confirmed plan. “Prior to its amendment, § 1325(a)(5) did not explicitly require adequate protection payments . . . . Section 1325(a)(5)[(B)](iii)(II) now protects against . . . abuse by assuring—through adequate protection payments—that the lender’s position will not worsen during the initial stages of a chapter 13 case.”).

 

14  See § 442.1 [ Attorney Fees after BAPCPA ] § 73.9  Attorney Fees after BAPCPA. See, e.g., In re Hill, No. 06-80502, 2007 WL 499622, at *9 (Bankr. M.D.N.C. Feb. 12, 2007) (“After confirmation and before the equal monthly payments begin, Section 507(a)(2) claims for the debtor’s attorneys’ fees and costs may be paid each month after the payment of the adequate protection payment that is required by Section 1325(a)(5)(B)(iii)(II).”); In re DeSardi, 340 B.R. 790 (Bankr. S.D. Tex. 2006) (Adequate protection payments must be made to car lender before payment of other administrative expenses such as attorney fees, but only to extent of adequate protection. If regular installment payment under confirmed plan is larger than amount necessary to provide adequate protection, administrative expenses must be paid before additional increment is paid to car lender.).

 

15  See below in this section.

 

16  Hanging sentence at the end of 11 U.S.C. § 1325(a), discussed beginning at § 75.1  In General: Modification Without § 506.

 

17  The hanging sentence at the end of § 1325(a) could be interpreted other ways—for example, to only require payment of $10,000 (without interest) over the life of the plan in this hypothetical. See § 451.1 [ In General: Modification Without § 506 ] § 75.1  In General: Modification Without § 506.

 

18  See § 451.1 [ In General: Modification Without § 506 ] § 75.1  In General: Modification Without § 506.

 

19  541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (2004).

 

20  See In re Hill, No. 06-80502, 2007 WL 499622, at *7 (Bankr. M.D.N.C. Feb. 12, 2007) (“The only requirement is that the equal monthly payments be in an amount sufficient to provide adequate protection. . . . [I]n most instances, the equal monthly payments will be greater than the adequate protection payments.”); In re White, 352 B.R. 633, 650 (Bankr. E.D. La. 2006) (Absent evidence that payments under plan are less than depreciation, payment of 910-day PMSI portion of car lender’s debt with interest provides adequate protection. “[A]dequate protection is a remedy generally available to creditors during the administration of a case and prior to confirmation. It is designed to protect a secured claimant from a diminution in the value of its collateral during the pendency of a case and prior to the implementation of a plan. Once the plan is confirmed, the requirements of confirmation have always dictated that the secured claim . . . be paid in real, or present value, terms. Thus, the payment of interest substitutes for adequate protection by providing the present value of the claim. The addition of a requirement for adequate protection on confirmation is somewhat curious given that § 1325(a)(5)(B)(ii) already requires payments under the plan which equal the present value of the claim. Thus, in order for this provision to be relevant, the payment stream proposed by the plan would have to equal the present value of the claim but not adequately protect the value of the collateral. This situation might occur if the collateral were depreciating at a rate greater than the level of plan payments. . . . Debtor is properly insuring the vehicle against risk of loss . . . . The Plan also provides for 8% interest . . . . Capital One failed to present any evidence at trial that the terms of the Plan, including the payments proposed, do not adequately protect its interest in the collateral.”); In re Bufford, 343 B.R. 827, 838–39 (Bankr. N.D. Tex. 2006) (Adequate protection under § 1325(a)(5)(B)(iii)(II) for a 910-day PMSI car claim means the decrease in value from the petition date and is provided by full payment of present value of allowed claim. “The adequate protection to be provided under § 1325(a)(5)(B)(iii)(II) is not further defined. The closest analogy the Court can make is the adequate protection defined in 11 U.S.C. § 361 . . . . [I]t is not readily apparent as to how this language has added an additional burden on debtors wishing to confirm their plans. . . . In the context of § 362, the Fifth Circuit has stated that ‘[a]dequate protection, properly defined, is the amount of an asset’s decrease in value from the petition date.’ . . . [I]n light of the fact that Velocity has not objected to the amount of the payments provided under the Plan, other than to the interest rate provided, that payment of its claim in full over the life of the Plan at an interest rate that protects the ‘value’ of this claim as of the petition date, as provided for in Till, is adequate to meet this standard.”).

 

21  See § 450.1 [ New Valuation Standards ] § 76.7  Valuation after BAPCPA.

 

22  See §§ 446.1 [ Surrender of Collateral ] § 74.6  Surrender, Sale, Vesting in Lienholder and Payment with Property after BAPCPA and 451.5 [ Surrender in Full Satisfaction? ] § 75.5  Surrender in Full Satisfaction?.

 

23  See 11 U.S.C. § 1326(a)(1)(C), discussed in § 401.1 [ Preconfirmation Payments ] § 44.6  Preconfirmation Payments after BAPCPA.

 

24  See also §§ 404.1 [ Adequate Protection before Confirmation ] § 47.2  Preconfirmation Adequate Protection after BAPCPA and 518.1 [ Failed Adequate Protection ] § 136.13  Failed Adequate Protection after BAPCPA.

 

25  See § 297.1 [ Failed Adequate Protection ] § 136.12  Failed Adequate Protection before BAPCPA.

 

26  See In re DeSardi, 340 B.R. 790 (Bankr. S.D. Tex. 2006).

 

27  See In re Hill, No. 06-80502, 2007 WL 499622, at *8 (Bankr. M.D.N.C. Feb. 12, 2007) (Disagreeing in part with In re DeSardi, 340 B.R. 790 (Bankr. S.D. Tex. 2006), “[t]he debtor must pay adequate protection when he retains the creditor’s personal property collateral because it is a requirement of Section 1326(a)(1)(C) and Section 1325(a)(5)(B)(iii)(II), not because it is a priority claim.”).

 

28  See §§ 518.1 [ Failed Adequate Protection ] § 136.13  Failed Adequate Protection after BAPCPA, 534.1 [ Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) ] § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA and 541.1 [ Consequences of Dismissal ] § 153.2  Consequences of Dismissal Added or Changed by BAPCPA.