The Effect of Surrender of Collateral on Valuation Under 11 U.S.C. § 506(a)(2) after Santander Consumer USA v. Brown

By Michael Sullivan, 2015 J.D. Candidate

Introduction

The importance of valuation in a Chapter 13 repayment plan cannot be understated—determining the value of a given piece of collateral will directly affect the claims of creditors whose debts are secured by that collateral. Because of this, the treatment of encumbered property is frequently a source of contention between debtors and creditors.

One way of dealing with encumbered property in a Chapter 13 is to surrender it to the secured creditor under § 1325(a)(5)(C). 1 The surrender provision . . .

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