§ 76.3     As of What Date Is Value Determined?
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 76.3, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

The Bankruptcy Code contains a flexible rule for the specific moment at which the value of collateral is determined in a Chapter 13 case. Section 506(a) provides, “value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditor’s interest.”1 Bankruptcy Rule 3012 purports to implement § 506(a) as follows: “The court may determine the value of a claim secured by a lien on property in which the estate has an interest on motion of any party in interest and after a hearing on notice to the holder of the secured claim and any other entity as the court may direct.”2

[2]

That the value of collateral securing an allowed claim is determined “in conjunction with” any hearing on disposition, use or Chapter 13 plan is not especially instructive of the point in time at which value is fixed. In jurisdictions that delay confirmation until after the claims bar date,3 the filing of a Chapter 13 case and the hearing on confirmation of a plan may be separated by more than six months. The value of cars, water beds and even real property can change dramatically in half a year’s time.

[3]

There is little agreement in the reported cases on the date for fixing the value of collateral in Chapter 13 cases. Consistent with § 506(a), the purpose for which value is being determined pushes around the date on which the process focuses. This guarantees a moving target because value is at issue in Chapter 13 cases to determine the extent of secured claims for eligibility purposes,4 for exemptions,5 for adequate protection,6 on motions for stay relief before7 and after8 confirmation, for various purposes at confirmation,9 on claims objections,10 at modification after confirmation,11 at conversion12 and even after completion of payments.13 Some of the reported decisions simply disagree about the timing for valuation even with respect to the same purpose.

[4]

Some courts have held that the value of collateral for Chapter 13 plan confirmation purposes should be determined as of the date of the petition.14 There is logic to this position because the amount of the creditor’s claim is fixed at the date of the petition by 11 U.S.C. § 502.15 The date of the petition sets an early benchmark value that can then be used to protect the secured claim holder from depreciation in its collateral between the filing and confirmation.16 One court explained that valuation at the petition is appropriate because any delay in formulating and confirming a plan is more within the control of the debtor than the secured party and thus the creditor should not be forced to bear the risk of delay through depreciation of its collateral.17 Another court determined value for confirmation purposes as of the petition because the use of any later date is “impracticable,” and “in the vast majority of cases, Debtors are making plan payments to the Chapter 13 Trustee, which include payments on secured claims, months before the effective date” of any confirmed plan.18 A third court reached the same result by a slightly different route: “the value as of the date of the petition appears to be the appropriate date for measuring value because the Debtor proposes to use the property for the entire time.”19

[5]

Exemptions typically are determined as of the date of the petition.20 Exemptions are relevant to the value of a creditor’s interest in estate property for purposes of determining the allowed amount of secured claims under § 506(a). It would be odd to determine the value of collateral for purposes of satisfying an allowed secured claim at confirmation under § 1325(a)(5)(B) as of a date that is different than the date for determining the exemption component of that same calculation.21

[6]

A majority of the reported decisions fix the value of collateral for § 1325(a)(5)(B) purposes at a date later than the filing of the petition. Many courts use the date of confirmation.22 One of these courts explained that petition date valuation is not appropriate because lienholders have adequate protection rights under § 361 between the petition and confirmation: “[F]ixing the value of collateral at filing does not construe § 506(a) in harmony with the adequate protection provisions of the Bankruptcy Code. . . . Fixing the value at confirmation would promote parity without regard to whether the collateral appreciates or depreciates.”23 Another court has held that collateral values for confirmation purposes are fixed on the date that proceedings to determine value are initiated.24 Another court held that “the best practical conclusion” was to value collateral for confirmation purposes at the time the plan is filed because this would generally coincide with the filing of the petition and “the plan fixes the proposed payment by the Chapter 13 debtor.”25 Other courts value collateral at the date of the valuation hearing.26 Aiming to accommodate adequate protection rights without encouraging motions for relief from the stay, one reported decision adopts a “multiple valuation approach,” valuing depreciating assets for confirmation purposes at the greater of replacement value at confirmation or liquidation value at the petition.27 In McDonald v. Master Finance, Inc. (In re McDonald),28 the Third Circuit declined to pick a definitive date for valuing collateral in a Chapter 13 case but observed, “whatever rule is adopted, it is desirable to avoid allowing an appeal to delay the date used for evaluation.”29

[7]

Several courts quote the phrase “effective date of the plan” in § 1325(a)(5)(B)(ii) and find a rule of valuation on the effective date of a Chapter 13 plan.30 The phrase “effective date of the plan” in § 1325(a)(5)(B)(ii) modifies “value . . . of property to be distributed under the plan.” These magic words entitle secured claim holders to interest to preserve the present value of payments over time under the plan.31 “Effective date” does not modify “allowed secured claim” that appears at the end of § 1325(a)(5)(B)(ii). It is at least a stretch to find a mandate for valuation at the effective date of the plan in the language of § 1325(a)(5)(B)(ii) itself. These courts do not explain the absence of effective date language in § 506(a). The absence of a definition of effective date of the plan anywhere in the Code has left these courts to disagree on when the effective date is.32

[8]

If collateral is depreciating—a car, for example—the creditor will usually be best served to argue for valuation at the petition. The debtor will seek the latest date possible to reduce the allowed amount of the secured claim that must be retired with interest to satisfy § 1325(a)(5)(B). In a jurisdiction that delays confirmation until after the claims bar date,33 the secured claim holder must develop a strategy to protect itself from depreciation between filing and confirmation. Adequate protection of the value that is being lost through depreciation must be demanded by motion.34 When depreciating collateral is valued prior to confirmation for purposes of adequate protection, there is logic to the argument that a second valuation should be timed closer to confirmation for § 1325(a)(5)(B) purposes.35 The debtor can sometimes avoid litigating adequate protection in advance of confirmation by agreeing to a higher value to be paid with interest through the confirmed plan. These machinations and all the controversy about what date to use for valuing collateral are avoided in jurisdictions that reach confirmation in Chapter 13 cases soon after the meeting of creditors.36

[9]

Upon demand for adequate protection,37 some bankruptcy courts conduct a valuation hearing; in other courts, there are formulas and methodologies that produce an estimate of value and an estimate of depreciation. In many courts with respect to cars, one form or another of the NADA Used Car Guide is used for adequate protection purposes and depreciation is calculated by formula as 1 percent or 1.25 percent of book value per month. Absent contrary evidence—and there is rarely contrary evidence because valuation of every used car in every Chapter 13 case is not practical—valuation for adequate protection purposes is a numbers game drawn from the little yellow or little black books that car lender representatives carry to meetings of creditors.

[10]

These numbers become important again at confirmation because typically the plan must pay the present value of the lienholder’s allowed secured claim at confirmation.38 “Allowed secured claim” at confirmation triggers a second valuation of collateral. In a district that delays confirmation, when the debtor has made some (or all) adequate protection payments and collateral has changed in value between the petition and confirmation, valuation becomes a new ball game, and accounting for the adequate protection payments is no small play. If the car was valued for adequate protection purposes early in the Chapter 13 case using a liquidation or surrender value—to approximate what the creditor would have but for the debtor’s use of the collateral before confirmation—what happens to that earlier valuation when the car is revalued at confirmation at its replacement value for purposes of § 1325(a)(5)? If depreciation for adequate protection purposes was calculated based on the foreclosure value of the car, how are those adequate protection payments accounted for when the confirmation value is based on replacement value? In districts that delay confirmation, the timing of valuation for adequate protection and confirmation purposes coupled with differing methodologies for determining value then combine at confirmation to make determination of the present value difficult and accounting for adequate protection payments obscure.39


 

1  11 U.S.C. § 506(a) (emphasis added).

 

2  Fed. R. Bankr. P. 3012. See §§ 58.6 [ Appear and Be Heard with Respect to the Value of Collateral ] § 53.7  Appear and Be Heard with Respect to the Value of Collateral and 67.3 [ Preconfirmation Valuation Disputes ] § 57.6  Preconfirmation Valuation Disputes.

 

3  See § 216.1 [ Timing of Hearing on Confirmation ] § 115.1  Timing of Hearing on Confirmation before BAPCPA.

 

4  See § 14.1 [ Are Claims Split under 11 U.S.C. § 506(a)? ] § 14.4  Are Claims Split under 11 U.S.C. § 506(a)?.

 

5  See § 49.1 [ Available and Important in Chapter 13 Cases ] § 48.1  Available and Important in Chapter 13 Cases.

 

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

 

7  See § 83.1 [ Application of § 362(d)(2) in Chapter 13 Cases ] § 64.5  Application of § 362(d)(2) in Chapter 13 Cases.

 

8  See § 241.1 [ Procedure ] § 124.1  Procedure.

 

9  See § 101.1 [ General Rules ] § 74.1  General Rules before BAPCPA.

 

10  See § 287.1 [ Timing, Procedure and Evidence Presumption ] § 135.1  Timing, Procedure and Evidence Presumption.

 

11  See § 254.1 [ Application of Tests for Confirmation ] § 126.2  Application of Tests for Confirmation.

 

12  See § 320.1 [ In Cases Filed after October 22, 1994 ] § 145.2  In Cases Filed after October 22, 1994.

 

13  See § 358.1 [ On Liens ] § 162.3  On Liens.

 

14  See Johnson v. GMAC (In re Johnson), 165 B.R. 524, 528 (S.D. Ga. 1994) (Valuation as of the date of the petition is appropriate for personal property in Chapter 13 cases. “That § 506(a) is cast in such generalities is not by accident. The legislative history of § 506 unequivocally indicates that subsection (a) is intended to accommodate a flexible approach to valuations rather than a single, fixed method. . . . The date on which the bankruptcy petition is filed and the order for relief is entered is the watershed date of a bankruptcy proceeding. As of this date, creditors’ rights are fixed (as much as possible), the bankruptcy estate is created, and the value of the debtor’s exemptions is determined. . . . [T]he scheme of Chapter 13 in attempting to accommodate competing goals of financial rehabilitation for the debtor and preservation of the constitutionally protected, bargained-for rights of secured creditors is best served by valuing the collateral as of the date of the filing. . . . The date the petition is filed and the bankruptcy case is commenced is the point where the secured creditor’s rights are first impacted . . . and the tension between adequate protection of such rights and a meaningful chance at rehabilitation under Chapter 13 for the debtor begins. . . . That value should be determined as of the commencement of the bankruptcy case is obvious where the collateral is depreciable personal property. Applying § 1325(a)(5)(B) to subjugate an objecting secured creditor to a plan that assigns a value to its collateral lower than the collateral’s value when the bankruptcy case was filed raises Fifth Amendment takings concerns.”); In re Mooney, 301 B.R. 627, 629 (Bankr. W.D.N.Y. 2003) (To determine whether a junior mortgage holder has any value to avoid modification under In re Pond, 252 F.3d 122 (2d Cir. 2001), the filing date “is the relevant date for the computation of the payoff figure for the senior lien.”); In re Marquez, 270 B.R. 761 (Bankr. D. Ariz. 2001) (Value of undersecured car lender’s collateral is determined as of the petition date, and the allowed amount of the secured claim is reduced by adequate protection payments between the petition and confirmation.); In re Longbine, 256 B.R. 470, 475 (Bankr. S.D. Tex. 2000) (For cramdown purposes, cars are valued as of the date of the petition in a Chapter 13 case. Applauding but disagreeing with In re Kennedy, 177 B.R. 967 (Bankr. S.D. Ala. 1995), “it is the Debtor’s use of the property, rather than any static value in alternative markets, that is determinative of valuation for purposes of cram down. In this case, the Debtor proposes to use the property from the date of the petition.”); In re Allen, 240 B.R. 231, 235 (Bankr. W.D. Va. 1999) (At confirmation 16 months after filing, value car as of petition to determine the allowable amount of a secured claim. “Valuing the collateral as of the filing date seems most appropriate because the filing date is the one which alters the rights otherwise possessed by the secured creditor under its documentation and state law to repossess the collateral, liquidate it and apply the sale proceeds to the debt. It also establishes consistency between valuation of wholly unsecured claims, which of course are established as of the filing date, and the unsecured portion of partially secured claims. Use of the filing date for collateral valuation also protects the creditor in the situation presented in this case where the creditor is secured by depreciating property and there is a significant delay after the filing date before the confirmation hearing or there is some casualty to the property before such hearing. The amount of an ‘allowed secured claim’ ought not ordinarily to vary depending on the date when a hearing on confirmation of a proposed plan is held, this case being a particularly appropriate illustration.”); In re Coleman, 231 B.R. 397, 400 (Bankr. S.D. Ga. 1999) (In dicta, in the context of a proposed modification after confirmation to surrender a car and treat any deficiency as unsecured, “[t]wo courts in this district have held that the phrase ‘effective date of the plan’ in Section 1325(a) refers to a valuation as of the date of the filing of the petition. . . . To allow revaluation of a secured creditor’s collateral utilizing another valuation date disregards the fact that, at filing, rights in the collateral are ‘fixed . . . , the bankruptcy estate is created, and the value of the debtor’s exemptions determined.’”); In re Cerminaro, 220 B.R. 518, 525 (Bankr. N.D.N.Y. 1998) (To determine whether a mortgagee is the holder of an allowed secured claim and thus entitled to the protection from modification in § 1322(b)(2), real property is valued as of the date of the Chapter 13 petition. “The Court addressed the argument in [In re Scheuer, 213 B.R. 415 (Bankr. N.D.N.Y. 1997)] that the date to determine the value of a debtor’s residence is the time when the mortgage was executed and concluded that ‘whether or not there was any equity in the Residence at the time the loan was made is irrelevant to the Court’s determination of value as of the commencement of the case for purposes of determining whether [a creditor] . . . holds a secured claim pursuant to Code § 506(a).’ . . . [T]he earliest date to value property for purposes of Code § 506(a) is the date of the Petition because that is when the bankruptcy estate is created.”); Ford Motor Credit Co. v. Phillips (In re Phillips), 142 B.R. 15 (Bankr. D.N.H. 1992); In re Frazier, 33 B.R. 175 (Bankr. D. Md. 1983); Chrysler Credit Corp. v. Van Nort, 9 B.R. 218 (Bankr. E.D. Mich. 1981); In re Adams, 2 B.R. 313 (Bankr. M.D. Fla. 1980).

 

15  Except with respect to oversecured claims. See 11 U.S.C. § 506(b), discussed in § 116.1 [ Oversecured Claim Holders ] § 78.5  Oversecured Claim Holders.

 

16  Secured claim holders are protected from depreciation between the filing and confirmation by the adequate protection requirement in 11 U.S.C. § 361. Secured claim holders must demand adequate protection by motion or by objection to use of collateral by the debtor. The preconfirmation adequate protection rights of secured claim holders are discussed in § 48.1 [ Adequate Protection of Lienholders prior to Confirmation ] § 47.1  Adequate Protection of Lienholders before Confirmation.

 

17  Ford Motor Credit Co. v. Phillips (In re Phillips), 142 B.R. 15 (Bankr. D.N.H. 1992).

 

18  In re Marquez, 270 B.R. 761, 767–68 (Bankr. D. Ariz. 2001).

 

19  In re Longbine, 256 B.R. 470, 475 (Bankr. S.D. Tex. 2000).

 

20  See § 49.2 [ Timing and Procedure ] § 48.4  Timing and Procedure. There is some controversy whether exemptions are determined as of the date of the original petition or as of the date of conversion when a Chapter 13 case is converted to Chapter 7. See § 317.1 [ Exemptions at Conversion ] § 144.1  Exemptions at Conversion.

 

21  It must be admitted that the possibility of incongruent dates for fixing exemptions and valuing collateral is no more disturbing than the misalignment of the date for calculation of the best-interests-of-creditors test at confirmation under § 1325(a)(4). See §§ 160.1 [ In General: Plan Payments vs. Hypothetical Liquidation ] § 90.1  In General: Plan Payments vs. Hypothetical Liquidation and 161.1 [ Exemption Issues ] § 90.2  Exemption Issues.

 

22  In re King, No. 01-37214DWS, 2003 WL 22110779 (Bankr. E.D. Pa. Sept. 2, 2003) (unpublished) (For confirmation purposes, car is valued at confirmation under § 506(a).); In re Townsend, 256 B.R. 881, 885 (Bankr. N.D. Ill. 2001) (Arguably in dicta, “the value of the vehicle, and therefore the amount of GMAC’s ‘allowed secured claim,’ shall be determined as of the date the Plan is confirmed by this Court.”); Winston v. Chrysler Fin. Corp. (In re Winston), 236 B.R. 167, 171 (Bankr. E.D. Pa. 1999) (“[T]he critical time at which the Car must be evaluated is the date of confirmation of the plan.”); In re Jones, 219 B.R. 506, 508–09 (Bankr. N.D. Ill. 1998) (Date of confirmation is proper reference point for valuing a car at cramdown. Debtor offered May 1997 edition of NADA Used Car Guide to show retail price for 1996 Mitsubishi Galant of $13,675. Creditor offered March 1997 report in support of its retail value of $15,300. Chapter 13 case was filed in March 1997; plan was confirmed on May 2, 1997. “The Bankruptcy Code does not define the ‘ effective date of the plan,’ . . . determinations of value can vary depending on the purpose for the valuation. . . . In the case of a secured creditor’s claim in the context of a cram down, the collateral should be valued as of the day the plan is confirmed. . . . Thus, the appropriate reference date is the date Debtor’s plan was confirmed in this case, and the value of the 1996 Mitsubishi Gallant [sic] and the amount of Money Store’s allowed secured claim is $13,675.00, the value given in the May Report.”); In re Kennedy, 177 B.R. 967, 971–74 (Bankr. S.D. Ala. 1995) (Although bankruptcy court decision in In re Johnson, 145 B.R. 108 (Bankr. S.D. Ga. 1992), was reversed on appeal, date of confirmation is still the appropriate time at which to determine the value of a car. “The Johnson view, or date of confirmation theory, says the issue is one which must take into account a variety of bankruptcy code sections and purposes. . . . It is the majority view. . . . According to Johnson, the amount of the entire claim against the debtor is fixed as of the filing of the petition; the value of the security and thus the amount of the claim which is secured may change throughout the case. . . . [T]he Court finds that the Johnson theory is the proper one and will determine the value of the Kennedy’s car as of the confirmation hearing.”); Beneficial Homeowner Serv. Corp. v. Moreau (In re Moreau), 140 B.R. 943 (N.D.N.Y. 1992); In re Johnson, 145 B.R. 108 (Bankr. S.D. Ga. 1992), rev’d, 165 B.R. 524 (S.D. Ga. 1994); In re Robertson, 135 B.R. 350 (Bankr. E.D. Ark. 1992); In re Pourtless, 93 B.R. 23 (Bankr. W.D.N.Y. 1988); Kehm v. Citicorp Homeowners Serv., Inc. (In re Kehm), 90 B.R. 117 (Bankr. E.D. Pa. 1988); Blakey v. Pierce (In re Blakey), 76 B.R. 465 (Bankr. E.D. Pa.), amended in part, vacated in part, 78 B.R. 435 (Bankr. E.D. Pa. 1987); In re Wilkins, 71 B.R. 665 (Bankr. N.D. Ohio 1987); Norman v. Norman, 32 B.R. 562 (Bankr. W.D. Mo. 1983); In re Erwin, 25 B.R. 363 (Bankr. D. Minn. 1982); In re Reynolds, 17 B.R. 489 (Bankr. N.D. Ga. 1981).

 

23  In re King, No. 01-37214DWS, 2003 WL 22110779, at *3 (Bankr. E.D. Pa. Sept. 2, 2003) (unpublished).

 

24  Virginia Nat’l Bank v. Jones, 5 B.R. 736 (Bankr. E.D. Va. 1980).

 

25  GMAC v. Chapman (In re Chapman), 135 B.R. 11 (Bankr. M.D. Pa. 1990). Accord In re Dews, 191 B.R. 86, 92 (Bankr. E.D. Va. 1995) (A request for adequate protection is denied in part because the “timing of the valuation also serves to protect Chrysler as it will get an amount equal to the value set as of the date of the filing of the Chapter 13 plan.” Chrysler’s collateral would depreciate at least $200 per month. Proposed plan would pay mortgage arrearages and administrative expenses in advance of Chrysler, delaying payments to Chrysler for eight months after confirmation. Plan proposed to pay value of Chrysler’s collateral in full with interest. Valuing collateral on the date of filing coupled with paying allowed secured claim in full adequately protects Chrysler.).

 

26  In re Ibarra, 235 B.R. 204, 213 & n.1 (Bankr. D.P.R. 1999) (“The present value of the claim to be paid under the plan is to be determined as of the effective date of the plan.” In a note, “The effective date of the plan ‘will ordinarily be provided for by the plan, and may be the date as of which the order confirming the Chapter 13 plan becomes final. However, the court will determine present value as of the date of the hearing of confirmation held under § 1324, because, as a practical matter, confirmation will almost always follow within a brief time after the issues raised under section 1325(a)(5)(B)(ii) are resolved.’”); In re Arnette, 156 B.R. 366, 368 (Bankr. D. Conn. 1993) (Value of a car for cramdown purposes in a Chapter 13 case should be determined as of the effective date of the plan, and the date of the valuation hearing is the appropriate date to use because “as a practical matter, confirmation will almost always follow within a brief time after [that] hearing.”); Blobaum v. Blobaum, 34 B.R. 962 (Bankr. W.D. Mo. 1983); In re Klein, 10 B.R. 657 (Bankr. E.D.N.Y. 1981).

 

27  Bank of Am. v. Byrd (In re Byrd), 250 B.R. 449, 451–54 (Bankr. M.D. Ga. 2000) (“The argument for multiple valuations is based on a construction of Section 506(a) that recognizes the conflict that would be created between Section 506(a) and the Code’s adequate protection provisions if a creditor’s secured status were fixed for confirmation purposes as of the petition date. . . . If every creditor in this district, secured by inherently depreciable collateral, were forced to initiate proceedings to ensure adequate protection of its interests, this Court would face an avalanche of contested matters. . . . [B]ecause the creditor is secured by inherently depreciable collateral, and is party to a case under Chapter 13, Creditor’s secured status should be determined based on the greater of the pickup’s replacement value as of the confirmation date, or on its liquidation value as of the petition date. . . . Creditor’s secured status should be determined based primarily upon the pickup’s confirmation date replacement value . . . . Creditor will be allowed to produce evidence that the petition date liquidation value of the pickup was greater . . . . [T]o the extent the Court has devised a legal fiction that treats creditors in cases under Chapter 13 who hold claims secured by inherently depreciable collateral as having moved the court for adequate protection prior to confirmation, the fiction is a necessary one.”).

 

28  205 F.3d 606 (3d Cir. 2000).

 

29  205 F.3d at 615.

 

30  See In re Stembridge, 287 B.R. 658 (Bankr. N.D. Tex. 2002) (For confirmation purposes, replacement value is determined as of the effective date of the plan, approximately the date of the hearing on confirmation.); In re Bernardes, 267 B.R. 690, 693–94 (Bankr. D.N.J. 2001) (Real property is valued as of the effective date of the plan for § 1325(a)(5) purposes even on a creditor’s postconfirmation motion for reconsideration of a claim under § 502(j). “Pursuant to § 1325(a)(5)(B)(ii), the value of collateral establishing the status of a secured claim is to be determined as of the ‘effective date of the plan.’ . . . 11 U.S.C. § 502(j) may not be employed to change the valuation date of collateral. . . . [A] vast majority of courts have interpreted ‘effective date of the plan’ to refer to one of two dates: the date that the petition was filed, . . . or the date of confirmation . . . . Old Republic bases its prayer for reconsideration solely upon the value of the subject realty as of July 2000, over eight months after confirmation. . . . [T]he July 2000 market value of the subject realty would not be a relevant consideration in reassessing the status of Old Republic’s claim.”); In re Farmer, 257 B.R. 556, 561–62 (Bankr. D. Mont. 2000) (For adequate protection and confirmation purposes, debtor’s truck is valued at the petition and then at the effective date of the plan; the monthly depreciation between the petition and confirmation must be paid by the debtor as adequate protection. At the petition, debtor’s truck was worth $14,175. Debtor purchased the truck 28 months earlier for $20,200. The court calculated average depreciation of $215 per month. “[V]aluation for confirmation purposes shall be determined as of the effective date of the plan . . . . For purposes of calculating the value for confirmation which Debtor will need to use in determining the allowed secured claim established through her motion for valuation, the monthly calculated depreciation of $215.00 is deducted from the petition date value of $14,175.00 for five (5) additional months (August 3, 2000 [the petition date] through January 3, 2001 [the anticipated date of confirmation]). The value of the truck for confirmation purposes is $13,100.00 ($14,175 less ($215 times 5)). . . . This adequate protection payment of $215.00 shall be paid by the Debtor to FCB, commencing December 1, 2000 and continuing thereafter on the first day of each month through the confirmation date of Debtor’s plan. Such payments shall be applied to the secured portion of FCB’s principal claim and not to any interest accruing on the secured portion of the claim as FCB is undersecured and not to any portion of the unsecured portion of FCB’s claim.”); Crain v. PSB Lending Corp. (In re Crain), 243 B.R. 75, 82–85 (Bankr. C.D. Cal. 1999) (Valuation for cramdown purposes is conducted as of the effective date of the plan, not on the date of the petition; because second mortgage holder was partially secured on the effective date of the plan, debtor could not void the creditor’s lien. At the filing, principal residence had a fair market value of $125,000 and the first deed of trust had a principal balance of $130,933. At confirmation, the fair market value of the property was $133,000 and the principal balance owed to the first mortgage holder was $129,750. The debtor contended that the second mortgage was completely unsecured and could be voided under § 506(d). “[T]he proper valuation date is the ‘effective date of the plan.’ Technically, a chapter 13 plan does not become effective on the date of the confirmation hearing. Even if the chapter 13 plan is confirmed on the date of the confirmation hearing, the order approving the plan becomes effective when entered. Federal Rules of Bankruptcy Procedure 9021. The confirmation order, which is not excepted under FRBP 7062, is then automatically stayed for ten days and becomes final only after any timely appeals have been resolved or the ten days have passed. . . . A plain reading of § 502(b) indicates that the amount of a creditor’s claim is fixed on the date of the petition filing. There is no language indicating that the value of the secured portion of the creditor’s claim must also be determined as of the date of the petition filing. In fact, the [Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (1992),] court has stated that a creditor should retain the benefit of any increase in the value of collateral during bankruptcy. . . . I conclude that the appropriate date of valuation for the Subject Property is the ‘effective date of the plan’ or ten days after entry of the order confirming the plan, provided no timely appeal has been made. Practically speaking, the date of the confirmation hearing will be used.”); In re Davis, 215 B.R. 824, 825–26 (Bankr. N.D. Tex. 1997) (Section 1325(a)(5)(B)(ii) requires valuation as of the effective date of the plan—the date of confirmation in this case. A car is valued for adequate protection purposes as of the petition date, and Chapter 13 trustee makes distributions to the car lienholder between the petition and confirmation based on that value. At confirmation, the vehicle is again valued to determine the cramdown value to be paid through the Chapter 13 plan. “The parties stipulate that the effective date of the debtors’ plan is the confirmation date.” For cramdown purposes, the value of the debtors’ car at the effective date was $22,250, not the $25,000 value used at the petition date to calculate adequate protection payments. The $3,667 paid to GMAC between the petition and confirmation “shall be retained by GMAC as adequate protection payments and applied to the overall outstanding debt.”); In re Owens, 120 B.R. 487 (Bankr. E.D. Ark. 1990) (Value collateral for purposes of confirmation as of effective date of the plan. As a practical matter, effective date of the plan is closest in time to the hearing on confirmation; thus, value will be determined at the confirmation hearing.); In re Cook, 38 B.R. 870 (Bankr. D. Utah 1984).

 

31  See § 111.1 [ “Value, As of the Effective Date of the Plan” Means Interest ] § 77.1  “Value, As of the Effective Date of the Plan” Means Interest.

 

32  Compare In re Stembridge, 287 B.R. 658 (Bankr. N.D. Tex. 2002) (Effective date of the plan for purposes of determining replacement value at confirmation is approximately the date of the hearing on confirmation.); Crain v. PSB Lending Corp. (In re Crain), 243 B.R. 75, 85 (Bankr. C.D. Cal. 1999) (“I conclude that the appropriate date of valuation for the Subject Property is the ‘effective date of the plan’ or ten days after entry of the order confirming the plan, provided no timely appeal has been made. Practically speaking, the date of the confirmation hearing will be used.”); In re Ibarra, 235 B.R. 204 (Bankr. D.P.R. 1999) (Effective date of the plan can be provided for by the plan and may be the date on which the order confirming the plan becomes final; however, in this case, court determines value as of the date of the hearing on confirmation.); In re Coleman, 231 B.R. 397 (Bankr. S.D. Ga. 1999) (Effective date of the plan means valuation as of the date of the filing of the petition.); In re Owens, 120 B.R. 487 (Bankr. E.D. Ark. 1990) (Effective date of the plan means the time of the hearing on confirmation.); In re Arnette, 156 B.R. 366 (Bankr. D. Conn. 1993) (Effective date of the plan means the date of the valuation hearing.).

 

33  See § 216.1 [ Timing of Hearing on Confirmation ] § 115.1  Timing of Hearing on Confirmation before BAPCPA.

 

34  See §§ 48.1 [ Adequate Protection of Lienholders prior to Confirmation ] § 47.1  Adequate Protection of Lienholders before Confirmation, 67.2 [ Adequate Protection Rights ] § 57.2  Adequate Protection Rights and 297.1 [ Failed Adequate Protection ] § 136.12  Failed Adequate Protection before BAPCPA.

 

35  See In re King, No. 01-37214DWS, 2003 WL 22110779, at *3 (Bankr. E.D. Pa. Sept. 2, 2003) (unpublished) (Because lienholders have adequate protection rights under § 361 between the petition and confirmation, car should be valued at confirmation under § 506(a) for § 1325(a)(5)(B) purposes. “[F]ixing the value of collateral at filing does not construe § 506(a) in harmony with the adequate protection provisions of the Bankruptcy Code. . . . Fixing the value at confirmation would promote parity without regard to whether the collateral appreciates or depreciates. Joined with the availability of adequate protection that compensates for the risk of depreciation, a confirmation date value achieves that end.”); In re Stembridge, 287 B.R. 658 (Bankr. N.D. Tex. 2002) (Pickup is appropriately valued twice in Chapter 13 case: once for adequate protection purposes as of the date the debtor seeks authority to make adequate protection payments; a second time for confirmation purposes, replacement value is properly determined as of the effective date of the plan.).

 

36  See § 216.1 [ Timing of Hearing on Confirmation ] § 115.1  Timing of Hearing on Confirmation before BAPCPA.

 

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

 

38  See § 101.1 [ General Rules ] § 74.1  General Rules before BAPCPA, 111.1 [ “Value, As of the Effective Date of the Plan” Means Interest ] § 77.1  “Value, As of the Effective Date of the Plan” Means Interest and 114.1 [ Calculating Payments to Secured Claim Holders ] § 78.2  Calculating Payments to Secured Claim Holders.

 

39  Some examples of the possibilities are discussed in § 114.1 [ Calculating Payments to Secured Claim Holders ] § 78.2  Calculating Payments to Secured Claim Holders.