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TITLE 11.
BANKRUPTCY · UNITED STATES CODE
Chapter 5.
Creditors, the Debtor and the Estate
Subchapter I. Creditors and Claims
11
USC § 506. Determination of secured status
(a)
(1) An allowed claim of a creditor secured by a
lien on property in which the estate has an interest, or that is subject to
setoff under section
553 of this title, is a secured claim to the extent of the value of such
creditor’s interest in the estate’s interest in such property, or to the
extent of the amount subject to setoff, as the case may be, and is an
unsecured claim to the extent that the value of such creditor’s interest
or the amount so subject to setoff is less than the amount of such allowed
claim. Such value shall be determined in light of the purpose of the
valuation and of the proposed disposition or use of such property, and in
conjunction with any hearing on such disposition or use or on a plan
affecting such creditor’s interest.
(2) If the debtor is an individual in a case under chapter
7 or 13,
such value with respect to personal property securing an allowed claim shall
be determined based on the replacement value of such property as of the date
of the filing of the petition without deduction for costs of sale or
marketing. With respect to property acquired for personal, family, or
household purposes, replacement value shall mean the price a retail merchant
would charge for property of that kind considering the age and condition of
the property at the time value is determined.
(b) To the extent that an allowed secured claim is
secured by property the value of which, after any recovery under subsection
(c) of this section, is greater than the amount of such claim, there shall be
allowed to the holder of such claim, interest on such claim, and any
reasonable fees, costs, or charges provided for under the agreement or
State statute under which such claim arose.
(c) The trustee may recover from property securing an
allowed secured claim the reasonable, necessary costs and expenses of
preserving, or disposing of, such property to the extent of any benefit to the
holder of such claim, including the payment of all ad valorem
property taxes with respect to the property.
(d) To the extent that a lien secures a claim against
the debtor that is not an allowed secured claim, such lien is void, unless--
(1) such claim was disallowed only under section
502(b)(5) or 502(e)
of this title; or
(2) such claim is not an allowed secured claim due only to the failure of
any entity to file a proof of such claim under section
501 of this title.
[Rev. 5-7-05]
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