Potential bankruptcy client wants to sell car in return for promissory note. I don’t see a point. If she does it make sure she is listed on the title as a lienholder. I’m in a contested situation with Wells Fargo over valuation of real estate in a Chapter 13. The appraisal we got before filing says that if the marketing window was 30 days the real estate would be valued at $150,000. If the marketing window was 90-180 days it would be $160,000. That spread makes the difference between stripping off a second mortgage and not. I contend that for the purposes of a bankruptcy the valuation needs to be determined using the shorter marketing window rather than using a valuation based on being able to leave the property on the market for 3-6 months. Most bankruptcy courts will try to grasp any opportunity in a contested case to find some equity. And I think “value” would have to be determined under normal market conditions, not a rush bankruptcy sale. I have never seen an appraisal with that sort of distinction. It’s not called for in the standardized forms used by appraisers. I’d get another appraisal/appraiser. We value personal property that way because we are trying to establish what a trustee would get for it. And we don’t use “yard sale” values for bankruptcy property not normally sold at yard sales, like cars. We use valuation guides that give normal market sale prices, not forced quick-sale, auction, or trade-in prices. At least for exemption/liquidation purposes you should be using trade-in (or less) for the value for vehicles. That isn’t necessarily appropriate for cram-down, however. At the same time, I think a 30-60 timeframe for sale/valuation is completely appropriate.
Related posts: