Valuation of Collateral is a powerful tool within the Bankruptcy process. This allows a Debtor to reduce a secured claim amount to the actual value of the collateral which secures it.

What does all that mean? Simply, wouldn't it be nice to pay the market value of your car, instead of what you owe on it? Sure it does.

Chapter 13 has a unique feature to basically cram down the value of the secured claim into its actual value. The extra, or the difference between the claim amount and the actual value, is then filed as an unsecured claim. If you're in a less than 100% plan... you just saved bunches of money! Better, if you're in a 0% plan, you are only going to pay for the value of the car.

of course, it comes with caveats. The BAPCPA Amendments to the Bankruptcy Code in 2005 made sure that you couldn't do this to "new" cars or even to other items you purchased within a year of filing. So, if it's been less than 910 days between your purchase and the filing... you can pretty much forget about using this great tool (with some limited exceptions).

Anyhow, I've filed this on two of my vehicles, and have successfully, and without even a fight, crammed down the value of one of my vehicle loans from $22K balance down to $11K! The remainder will be an unsecured claim in my 0% Plan. The lender will see about... $0 of the $11K.

Not bad. Not bad at all. My cost... about $20.00 in certified letters served on the creditors attorney and the corporate offices. My savings... $11,000. Try that at Wal*Mart!

Attached is a sample pleading for a Motion to Value Security. You will need to determine if your local rules provide for negative noticing. Your local rules may also only allow you to motion to determine secured status and not a valuation.