National Consumer Bankruptcy Rights Center

Protecting The Rights Of Consumer Debtors In Bankruptcy

valuation

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Fifth Circuit Addresses Valuation of Mobile Home

Delivery and set-up costs are not included in the valuation of a mobile home under section 506(a). 21st Mortgage Corp. v. Glenn, No. 17-60533 (5th Cir. Aug. 13, 2018).

Kayla Glenn elected to retain her mobile home and pay it off with 5% interest through her chapter 13 bankruptcy. 21st Mortgage objected to Ms. Glenn’s proposed plan based on her valuation of the property as not including the cost of delivery and set-up. The bankruptcy court confirmed the plan and the district court affirmed. 21st Mortgage appealed. [Read more…] about Fifth Circuit Addresses Valuation of Mobile Home

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Battle of the Valuation Reports

Retail value under NADA, rather than trade-in value, governs valuation of car under section 506(a)(2). In re Burton, No. 17-10979 (Bankr. D. Del. May 16, 2018).

Deborah Burton filed an amended chapter 13 plan in which she listed the value of her secured vehicle as $8,100 and proposed a 5% interest rate. In support of her valuation, Ms. Burton submitted an appraisal from a car dealership stating the vehicle’s trade-in value, taking into account damage and wear. Ally Financial, the secured holder of the car loan, objected to the valuation and the interest rate, arguing that, based on a National Automobile Dealers Association valuation, the vehicle should have been valued at $11,105, and should be repaid at an interest rate of 7%. Both parties maintained that the holding in Assocs. Commercial Corp. v. Rash, 520 U.S. 953 (1997), supported their valuation. [Read more…] about Battle of the Valuation Reports

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Debtor’s Valuation of Worker’s Comp Claim Insufficiently Supported

An affidavit by the debtor’s worker’s compensation counsel asserting that at the time of the bankruptcy petition the worker’s comp claim had a mere nuisance value, was insufficient to overcome the IRS’s claim for a secured interest in the amount the worker’s comp case actually settled for several months post-petition. United States v. Austin (In re Austin), No. 17-6024 (B.A.P. 8th Cir. April 9, 2018).

When Scott and Anna Austin filed their chapter 13 petition, Mr. Austin had a pending worker’s compensation action which they valued on their schedules at zero or “unknown amount.” The IRS filed a claim asserting a tax lien to which the Austins objected. While that action was pending, the Austins settled the worker’s compensation claim for $21,448.80, of which they received $15,661.60. The IRS amended its claim to show a tax lien secured by the $15,661.60 settlement amount. The Austins objected again, presenting the affidavit of their worker’s compensation attorney, Michael Smallwood, that, notwithstanding the ultimate settlement amount, the worker’s compensation claim in fact had only a “nuisance” value of $3,000 at the time the Austins filed for bankruptcy. Based on the affidavit, the bankruptcy court reduced the IRS’s secured claim to $3,000. [Read more…] about Debtor’s Valuation of Worker’s Comp Claim Insufficiently Supported

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Replacement Value Governs Value of Surrendered Vehicle

Under section 506(a)(2), replacement value rather than foreclosure value is the proper measure of property securing an allowed claim where the debtor plans to surrender the property under section 1325(a)(5)(C). Santander Consumer USA v. Brown, No. 13-13013, — F.3d —-, 2014 WL 1245266  (11th Cir. March 27, 2014). [Read more…] about Replacement Value Governs Value of Surrendered Vehicle