Just wondering... 722 question.

[tigergem]

If valuation has already been determined by the BK judge in Ch 13, is that the same value one would use to request a 722 loan if the case was converted to a 7?

And would it be appropriate to subtract disbursements already made by the Ch 13 Trustee from the determined valuation amount to arrive at a 722 loan amount?

[SMinGA]

I don't know about the first part, but I think no on the 2nd part. The redemption is based on current value at the time of redemption - so I don't think you can subtract prior payments.

[justbroke]

And would it be appropriate to subtract disbursements already made by the Ch 13 Trustee from the determined valuation amount to arrive at a 722 loan amount?

I'll answer this second part first. SMinGA is correct. The redemption value is less of what you currently owe (balance) or the "current market value" as of the hearing date (see below for discussion on "market value"). You can't take the current market value and then just subtract your payments made in the Chapter 13. That would be entirely unfair to the creditor.

If valuation has already been determined by the BK judge in Ch 13, is that the same value one would use to request a 722 loan if the case was converted to a 7?

The answer is simply no. If you read 11 USC 348, the "affects" of conversion you'll see the answer.

Oh well, I'll just repeat it here since I'm a full service kind of guy...

11 USC 348(f)(1)(B) valuations of property and of allowed secured claims in the chapter 13 case shall apply only in a case converted to a case under chapter 11 or 12, but not in a case converted to a case under chapter 7, with allowed secured claims in cases under chapters 11 and 12 reduced to the extent that they have been paid in accordance with the chapter 13 plan;

For for a redemption, it's the Current Market Value. Different courts have reached different conclusions on this, but 11th Circuit precedence (Georgia, Alabama, Florida) is that valuation is first, on the day of the hearing on the redemption; and second, that it's the "wholesale" value or trade-in value, not the retail value!

(justbroke's study guide: The (11th Circuit) found that the wholesale or liquidation valuse is appropriate because had the debtor surrendered the car, the creditor would only get that anyhow. (The Court also found that a Chapter 13 is treated differently.) Basically the creditor is out no less money than they would be if they had to sell the car at auction themselves. Using the wholesale value actually saves the creditor money in that they don't need to deal with storage fees, continued depreciation, and auction fees. See In Re Perez, Middle District of Florida Tampa Division, Chapter 7, Case No. 04-08011-8W7).

Good reading if you want to dissect the Supreme Court's decision in Associates Commercial Corp v. Rash, and how it is rectified for Chapter 7s.

In Re Perez - Memorandum Decision on Motion to Redeem Collateral. )

[music12]

oh, justbroke, do you realize that you have become a lawyer? maybe you should become a bk lawyer, you would make a load of money these days!

[justbroke]

I wish I were a BK lawyer. Then I would not need file BK. When my brother was in a Boston-area law school in 1994, I used to study with him. I wanted to go study intellectual property law, but never got up the nerve. If only...

But think of it this way... I may have been a Trustee by now or even a Creditor Attorney... so, be careful what you wish for!

[tigergem]

For for a redemption, it's the Current Market Value. Different courts have reached different conclusions on this, but 11th Circuit precedence (Georgia, Alabama, Florida) is that valuation is first, on the day of the hearing on the redemption; and second, that it's the "wholesale" value or trade-in value, not the retail value!

As always, you're the best JB, thank you. I'll be doing that reading.

I'm guessing, that ifMaybe I'm not reading or understanding it correctly. I haven't had my second cup of coffee yet.

[justbroke]

I call that the "status quo" paragraph. Basically, if you entered the Chapter 13 and had arrears and were in default, you are again in default upon Conversion.

I actually had this "problem" but it was a non-problem! First, the one vehicle that was one month late prior to filing, I redeemed it! The other vehicle was reaffirmed, and they messed up on the reaffirmation (which is the only reason I signed it!). (They calculated the interest wrong, and it's really a 0% 31-month loan! I can't wait to fight that one in the BK court when it comes time.)