In re Perales

In re Perales, ___ B.R. ___ (B.A.P. 6th Cir. 2012)
The Bankruptcy Appellate Panel of the Sixth Circuit (the “6th Cir. BAP”) affirmed a bankruptcy court’s order granting the Chapter 7 debtor’s motion to redeem his motor vehicle for the lump sum payment to the lienholder of $1,400, even though the bankruptcy court did not specify what sources, other than the evidence, it consulted to arrive at that amount. Acknowledging that the Sixth Circuit has not established a uniform method of motor vehicle valuation under 11 U.S.C. § 506(a)(2), the 6th Cir. BAP found that the bankruptcy court based its valuation upon figures available on the website, which had been presented by the Debtor; that it was not an abuse of the bankruptcy court’s discretion to do so; and that the bankruptcy court was not required to state with any additional particularity any other basis for its valuation. The 6th Cir. BAP also held that the lienholder had adequate notice that the value of its claim and its collateral were to be determined at the hearing on the Debtor’s motion.
Procedural context:
After a hearing, the bankruptcy court entered an order granting a Chapter 7 debtor’s motion to redeem his motor vehicle for a lump sum of $1,400. The holder of the lien on that vehicle appealed that order to the 6th Cir. BAP.
Pursuant to 11 U.S.C. § 722 and Federal Rule of Bankruptcy Procedure 6008, a Chapter 7 debtor filed a motion to redeem his motor vehicle in the lump sum of $1,132. As evidence for that valuation, the debtor presented a print-out from showing that figure as a private party sale value for the vehicle. The lienholder objected to the redemption motion, claiming that the vehicle should be redeemed for $10,014, the full remaining amount owed on the debt. Upon notice, the bankruptcy court held a hearing on the redemption motion. At that hearing, the lienholder did not present any evidence of the value of the vehicle, nor did it object to the valuation. In granting the redemption motion, the bankruptcy court stated that it had reviewed the figures submitted by the Debtor and had “investigated several sources on its own” to arrive at the value of $1,400. The lienholder appealed the order granting the redemption motion, asserting that the bankruptcy court erred by failing to hold an evidentiary hearing regarding the value of its collateral and by failing to specifically state the basis for its valuation.
Emerson, McIvor, and Preston, Bankruptcy Appellate Panel Judges

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