Adequate Protection Payments
(a) Plan Proposal. A plan shall propose monthly adequate protection payments to creditors secured by depreciating personal property to be included in the plan payments, beginning with month one. Unless the court orders otherwise, the debtor shall not make adequate protection payments directly to any creditor or reduce the amount of the plan payments made to the case trustee for any amount attributable to the adequate protection payments.
(b) Trustee Payment. The case trustee is authorized to make pre-confirmation adequate protection payments to one or more secured creditors if:
(1) The plan provides for payment of the adequate protection payments;
(2) The debtor’s Schedule D discloses the debt and describes the collateral;
(3) The creditor has filed a secured proof of claim, with documentation evidencing a perfected security interest, that asserts a purchase money security interest in the personal property;
(4) The debtor or creditor sends a letter to the case trustee requesting payment of pre-confirmation adequate protection payments set forth in the plan along with a copy of the secured proof of claim; and
(5) The collateral is depreciating and the amount of the adequate protection payments approximates the depreciation, which for motor vehicles is generally in the range of 1% of the value of the vehicle per month.
(c) Payment Without Prejudice. Payment of pre-confirmation adequate protection payments is without prejudice to the secured creditor’s right to object to the plan, or seek a determination as to the value of the secured claim or amount necessary to provide adequate protection.
(d) Timing of Payments. The case trustee is entitled to take the percentage fee from all adequate protection payments received or collected. To the extent the case trustee has funds on hand, the case trustee shall begin making pre-confirmation adequate protection payments if the case trustee receives the letter requesting pre-confirmation more than 14 days before the case trustee’s scheduled monthly distribution; otherwise the case trustee will distribute adequate protection payments beginning with the next month’s distribution. If the debtor has paid an insufficient amount of money to pay adequate protection payments in full, the case trustee shall pay the creditors in pro rata amounts.
(e) Payment on Confirmation or Dismissal. If the case trustee has not made pre-confirmation adequate protection payments, the case trustee shall promptly disburse the adequate protection payments after the court confirms the plan. If the court dismisses the case before confirmation of a plan, the case trustee will pay the creditor any adequate protection payments due and owing from funds received by the case trustee under Bankruptcy Code § 1326(a)(1)(A), less the statutory case trustee’s fee, then allowed administrative expenses. If the case trustee is required to pay adequate protection payments to more than one creditor but the case trustee has an insufficient amount of money to pay them in full, the case trustee shall pay the creditors in pro rata amounts.
Committee Notes 2009: Time deadlines have been amended to be consistent with amendments to the Federal Rules of Bankruptcy Procedure, effective December 1, 2009.
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