What Are Chapter 13 Property Valuation Orders?

In late December I wrote a pair of posts on the 2016 Bankruptcy Abuse Prevention and Consumer Protection Act Report (BAPCPA Report) that tried to illustrate who chapter 13 bankruptcy debtors are. Although the BAPCPA Report contains several tables for chapter 13, I skipped Table 5, which concerns property valuation orders. In 2016, these orders were very rare in the Eastern District of New York and the Southern District of New York, but there are a few hundred in the other districts in the state. What are these orders and why do they matter for the BAPCPA Report?

Section 506 of the Bankruptcy Code permits parties to determine whether a creditor’s allowed claim is secured at all as well as the value of the creditor’s claim. The value of personal property securing the claim is estimated as the replacement value of the item at the time the debtor filed the petition. Section 1325, which governs chapter 13 and is cited specifically by the BAPCPA Report materials, also states that the bankruptcy court must confirm the chapter 13 plan if the value of property distributed according to each allowed, secured claim is equal to or greater than the respective value of the claims.

Rule of Bankruptcy Procedure 3012 outlines how parties are to ask for a determination of the amount of secured claims. They can do so in one of three ways: a regular motion, an objection to the claim, and in the plan itself. After the request is made, the relevant parties are given notice, and then the bankruptcy court holds a hearing to determine the value of the property. Rule 3012 doesn’t specify what methods the court is to use in valuing the claim, but it will decide based on what evidence the parties present at the hearing.

To answer the second question, why these orders matter for the BAPCPA Report, the best answer is that the report wants to show that the plans are being properly confirmed based on the valuations of the debtors’ assets. Alternatively, they can show where creditors might be contesting debtors’ low-ball valuations of their homes for the purpose of stripping underwater junior liens. Looking at Table 5, it’s clear that these orders predominantly appear in one state: Florida.

The 2016 BAPCPA Report is here.

Property valuation disagreements aren’t common in New York bankruptcy. As a result, debtors will want to consult with an experienced New York bankruptcy lawyer to ensure their properties are properly appraised before they file.

For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA

Recent Posts

So a Private Debt Collector Contacts You About a Tax Debt…

By the time debt collectors start contacting them, debtors should consider discussing their situations with an experienced New York bankruptcy lawyer. This counts doubly for when the debt collector is trying to recover a tax debt. Wait, what’s that again? A debt collector pursuing a public debt rather than a private one? Yes, it’s true.

Read More »

Bankruptcy Filings Were Down in 2017, But Not in New York

Last year I asked how many debtors file New York bankruptcy cases each year. The post provided context to a series I ran on the data from the 2016 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) Report. The 2017 BAPCPA report came out recently, but rather than repeat the question, I want to just

Read More »

Bankruptcy and Balancing Your Budget

Unfortunately, most New York bankruptcy debtors see bankruptcy as a last resort after they’ve tried other options, like debt settlement. Perhaps they believe that bankruptcy is a sign of failure, even though the alternatives are usually worse. Instead of seeing bankruptcy as throwing in the towel against one’s debts, it can help to look at

Read More »

What Is a ‘Hard Pull’ or ‘Soft Pull’ of a Credit Report?

The terms “hard pull” or “soft pull” sound like sports jargon, but they do relate to personal credit. Specifically, they distinguish between two types of inquiries into one’s credit report, so they’re called “hard inquiries” and “soft inquiries” as well. What is this difference and when does it matter to New York bankruptcy debtors? The

Read More »

How to Prevent Volatile Prices From Interfering with Your Chapter 13 Plan

Successfully completing a chapter 13 New York bankruptcy repayment plan requires careful planning and budgeting. All debtors filing in that chapter will undoubtedly have some fixed costs, usually auto-loan payments or a residential mortgage, that will go into the plan. Then debtors will have to account for not-so-fixed costs. These would be daily necessities, such

Read More »

Did Your Credit Score Improve Last Year? Here’s Why

It’s not often that good news comes from credit-reporting agencies changing their behavior, but it appears that many consumers’ credit scores have risen in the last few years, hopefully reducing the number of New York bankruptcy cases. The National Consumer Assistance Plan is the name for a joint program by the agencies to change their

Read More »