[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

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No. 13-13013

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D.C. Docket Nos. 5:13-cv-00068-CAR, 12-51926

In re: PHILLIP JEFFERSON BROWN,

Debtor.

__________________________________________________________________

SANTANDER CONSUMER USA, INC.,

as assignee of Thor Credit Corp.,

Plaintiff-Appellant,

versus

PHILLIP JEFFERSON BROWN,

Defendant-Appellee.

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Appeal from the United States District Court 

for the Middle District of Georgia

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(March 27, 2014)

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Before WILSON, Circuit Judge, BUCKLEW,* and LAZZARA,** District Judges.

BUCKLEW, District Judge:

Santander Consumer USA, Inc., as assignee of Thor Credit Corp.

(“Santander”) appeals the district court’s affirmance of the bankruptcy court’s 

order overruling Santander’s objection to the confirmation of Phillip Jefferson 

Brown’s plan under Chapter 13 of the United States Bankruptcy Code, which 

proposed that Brown surrender his vehicle under 11 U.S.C. § 1325(a)(5)(C) to

satisfy Santander’s claim. The bankruptcy court held 11 U.S.C. § 506(a)(1) and 

(a)(2) determined the vehicle’s value and hence the amount of Santander’s secured 

claim, which would be satisfied by Brown’s surrender of the vehicle. 

The issue before this Court is whether § 506(a)(2)’s valuation standard 

applies when a Chapter 13 debtor surrenders his vehicle under § 1325(a)(5)(C).

We hold that it does, and we affirm. 

I.

We have jurisdiction because the district court’s affirmance of the 

bankruptcy court’s decision is a final appealable order. 28 U.S.C. § 158(d)(1). 

Brown’s plan was confirmed at the time of the district court’s order, which

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* Honorable Susan C. Bucklew, United States District Judge for the Middle District of 

Florida, sitting by designation.

** Honorable Richard A. Lazzara, United States District Judge for the Middle District of 

Florida, sitting by designation.

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definitively concluded that § 506(a)(2) governed the valuation of Brown’s vehicle

surrendered under § 1325(a)(5)(C). See In re Colbourne, No. 12-14722, 2013 WL 

5789159, at *1 nn.3-4 (11th Cir. Oct. 29, 2013) (per curiam). The district court’s 

decision is “final and ended this part of the litigation on the merits,” leaving the 

bankruptcy court with nothing left to decide. T & B Scottdale Contractors, Inc. v. 

United States, 866 F.2d 1372, 1375 (11th Cir. 1989).

II.

In July 2007, Brown purchased a 37-foot 2006 Keystone Challenger 

recreational vehicle. Brown entered into a loan agreement secured by the

recreational vehicle. In July 2012, Brown filed for Chapter 13 bankruptcy. 

Santander, the owner of the loan agreement, filed a proof of secured claim in the 

bankruptcy court for $36,587.53, the outstanding payoff balance due at the petition 

date. Brown’s modified Chapter 13 plan proposed surrendering the vehicle in full 

satisfaction of Santander’s claim. Santander objected to the confirmation of the 

plan. 

At the confirmation hearing on September 27, 2012, the parties disagreed on 

the method for valuing Brown’s vehicle.1

 Brown argued that § 506(a)(2)’s 

replacement value standard governed his vehicle’s valuation, which in turn

 1

 At that time, Santander had possession of the vehicle but had not sold it.

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determined the amount of Santander’s secured claim. Brown contended that if his 

vehicle’s replacement value exceeded his debt, surrendering his vehicle would 

satisfy Santander’s entire claim (and his debt) under § 1325(a)(5)(C). Santander 

argued that a surrendered vehicle’s value should be based on its foreclosure value, 

not replacement value. 

On December 3, 2012, the bankruptcy court overruled Santander’s 

objection, holding that § 506(a)(2) required valuing Brown’s vehicle based on its 

replacement value. The bankruptcy court found that while the Supreme Court’s 

1997 decision in Associates Commercial Corp. v. Rash, 520 U.S. 953, 117 S. Ct. 

1879 (1997) supported applying a foreclosure value standard to Brown’s 

surrendered vehicle, Rash preceded the Bankruptcy Abuse Prevention and 

Consumer Protection Act of 2005’s (“BAPCPA”) addition of § 506(a)(2), which 

required the replacement value standard. The court concluded Santander would 

have a secured claim to the extent of the vehicle’s replacement value, and that 

Brown’s surrender of the vehicle would satisfy that claim under § 1325(a)(5)(C). 

Following a valuation and confirmation hearing, the bankruptcy court 

determined that the vehicle’s replacement value at least equaled the debt and 

confirmed Brown’s Chapter 13 plan.2

 Santander appealed the bankruptcy court’s 

 2

 Santander challenges only the bankruptcy court’s decision to apply § 506(a)(2)’s replacement 

value standard in this case, not the court’s finding regarding the vehicle’s replacement value.

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decision to apply the replacement value standard to the district court, which 

rejected Santander’s arguments and affirmed the bankruptcy court’s decision. 

III.

“The factual findings of the bankruptcy court cannot be set aside unless they 

are clearly erroneous; however, conclusions of law made by either the bankruptcy 

court or the district court are subject to de novo review.” In re Graupner, 537 F.3d 

1295, 1299 (11th Cir. 2008). 

A.

Under § 1325(a)(5), a plan’s treatment of an “allowed secured claim” can be 

confirmed if: the secured creditor accepts the plan, the debtor retains the collateral 

and makes payments to the creditor, or the debtor surrenders the collateral. 11 

U.S.C. § 1325(a)(5)(A)-(C). In this case, Brown exercised the surrender option 

under § 1325(a)(5)(C). 

The term “allowed secured claim” refers to § 506(a). Rash, 520 U.S. at 957, 

117 S. Ct. at 1883 (“The value of the allowed secured claim is governed by § 

506(a) of the Code.”); Graupner, 537 F.3d at 1296. Section 506(a)(1) bifurcates a 

secured creditor’s allowed claim into secured and unsecured portions based on the 

underlying collateral’s value and addresses how to determine such value:

An allowed claim of a creditor secured by a lien on property in which 

the estate has an interest . . . is a secured claim to the extent of the 

value of such creditor’s interest in the estate’s interest in such 

property . . . and is an unsecured claim to the extent that the value of 

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such creditor’s interest . . . 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 . . . .

11 U.S.C. § 506(a)(1) (2006) (emphasis added). 

In Rash, the debtor proposed to retain the collateral under § 1325(a)(5)(B), 

while valuing the collateral based on its foreclosure value. 520 U.S. at 957, 117 S. 

Ct. at 1883. However, the Supreme Court interpreted “disposition or use” as 

requiring different valuation standards depending on whether the collateral was 

surrendered or retained. Id. at 962, 117 S. Ct. at 1885. Rash held that the proper 

standard was replacement value, not foreclosure value, in the retention context. Id. 

After Rash, BAPCPA added § 506(a)(2). Like § 506(a)(1)’s last sentence, § 

506(a)(2) refers to § 506(a)(1)’s bifurcation provision and addresses how to 

determine value. Unlike § 506(a)(1), § 506(a)(2)’s scope is limited to certain cases 

and expressly mandates a replacement value standard:

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.

11 U.S.C. § 506(a)(2) (2006) (emphasis added). Thus, when § 506(a)(1) and (a)(2) 

both apply, a creditor holding an undersecured claim would have a secured claim 

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equal to the collateral’s judicially-determined replacement value and an unsecured 

claim to the extent the debt exceeds the collateral’s replacement value.

The parties do not dispute that Brown is an individual in a Chapter 13 case 

with property falling within the scope of § 506(a)(2). Nevertheless, they dispute 

whether § 506(a)(2) applies. Santander contends § 506(a)(2)’s replacement value 

standard does not apply where, as here, the debtor exercises the surrender option 

under § 1325(a)(5)(C). Brown contends it does.

B.

We begin with the text of the Bankruptcy Code. In re Allied Mech. Servs., 

Inc., 885 F.2d 837, 838 (11th Cir. 1989). Section 506(a)(2)’s text—“[i]f the debtor 

is an individual in a case under chapter 7 or 13, such value . . . shall be determined 

based on the replacement value”—expressly requires applying a replacement value 

standard in cases falling within its ambit. And the cases that fall within the scope 

of § 506(a)(2)’s ambit include those involving a Chapter 13 debtor’s personal 

property or property for personal, family, or household use—precisely the kind at 

issue here. Section 506(a)(2), by its plain terms, applies to this case. 

We disagree with Santander’s textual arguments. Santander argues that 

applying § 506(a)(2)’s replacement value standard when a debtor surrenders 

property under § 1325(a)(5)(C) would misapply Rash and violate § 506(a)(1)’s 

“disposition and use” language. Specifically, Santander contends that applying a 

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replacement value standard would ignore Rash’s holding that different valuation 

standards should apply depending on the collateral’s “disposition or use,” with 

foreclosure value governing surrender and replacement value governing retention.

But Santander fails to acknowledge that Rash preceded BAPCPA’s addition 

of § 506(a)(2), which expressly requires applying the replacement value standard 

in this case. And while § 506(a)(2)’s replacement value standard mandate

seemingly contradicts § 506(a)(1)’s broader “disposition and use” valuation 

language, a well-established canon “of statutory construction [is] that the specific 

governs the general.” RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 132 S.

Ct. 2065, 2071 (2012) (internal quotation marks omitted). Here, § 506(a)(2) 

specifies how to value certain property in Chapter 7 and 13 cases, while § 

506(a)(1) is more broadly worded and says nothing about Chapter 7 and 13 cases. 

When a case falls within § 506(a)(2)’s ambit, its specific requirements control. Id.

(“The general/specific canon is . . . applied to statutes in which a general 

permission or prohibition is contradicted by a specific prohibition or permission.

To eliminate the contradiction, the specific provision is construed as an exception 

to the general one.”).

Santander’s corollary argument is that § 506(a)(2) only applies to cases 

where the debtor exercises the retention option under § 1325(a)(5)(B). But this 

requires us to read a limitation into the statute that does not exist in the plain text.

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Congress expressly limited § 506(a)(2) to certain Chapter 7 and 13 cases; it could 

have also limited § 506(a)(2) to cases where the debtor retains or “uses” the 

collateral. Congress did not, and neither will we.

Santander also asserts that § 506(a)(2) only applies to retained property 

under § 1325(a)(5)(B), because BAPCPA only added § 506(a)(2) to codify Rash’s 

holding that replacement value should govern in the retention context. We 

acknowledge that cases have described § 506(a)(2) as a codification of Rash, see, 

e.g., In re Martinez, 409 B.R. 35, 40 (Bankr. S.D.N.Y. 2009), but they do not hold 

that § 506(a)(2) is limited to the facts of Rash. Nor does the text of § 506(a)(2) 

support that conclusion. 

Santander also suggests that it is improper to conduct any valuation at all,

because Rash “does not state that the court is to pre-determine the value of 

surrendered vehicles under § 506(a) based on foreclosure value, or any other value 

standard.” (Ini. Br. 12.) However, as Santander concedes, § 506(a)(1) bifurcation 

applies. (Reply Br. 2.) Because bifurcation is premised on the collateral’s

valuation, “[i]t was permissible for [Brown] to seek a valuation in proposing [his] 

Chapter 13 plan.” Nobelman v. Am. Sav. Bank, 508 U.S. 324, 328, 113 S. Ct. 

2106, 2110 (1993) (“Petitioners were correct in looking to § 506(a) for a judicial 

valuation of the collateral to determine the status of the bank’s secured claim.”).

C.

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Nor are we persuaded by Santander’s arguments that applying § 506(a)(2) in 

the surrender context would be absurd. Santander argues that it would be absurd 

because it allows debtors to surrender collateral in full satisfaction of the debt. 

This overstates the effect of § 506(a)(2). Surrender would satisfy the creditor’s 

secured claim, not the entire debt. If a creditor holds an undersecured claim, the 

creditor would still have an unsecured claim to the extent the debt exceeds the 

collateral’s judicially-determined replacement value. 

Santander also argues that applying § 506(a)(2) would be absurd because it 

eliminates creditors’ contract and state law rights to liquidate and pursue an 

unsecured claim for any deficiency. But state law does not govern if the 

Bankruptcy Code requires a different result. See Butner v. United States, 440 U.S. 

48, 55, 99 S. Ct. 914, 918 (1979); Raleigh v. Ill. Dep’t of Revenue, 530 U.S. 15, 20, 

120 S. Ct. 1951, 1955 (2000) (holding that creditors’ rights are “subject to any 

qualifying or contrary provisions of the Bankruptcy Code”). Here, the Bankruptcy 

Code is contrary to state law, as an unsecured claim under § 506(a)(1) and (a)(2) 

equals the amount that the debt exceeds the property’s replacement value—not the 

amount of post-sale deficiency. Thus, state law cannot apply. 

During oral argument, Santander cited Graupner, 537 F.3d 1295, and 

contended that applying § 506(a)(2) would be unfair to secured creditors and 

contrary to the legislative intent to benefit secured creditors. But Graupner did not 

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address § 506(a)(2); it addressed the “hanging paragraph” at the end of § 

1325(a)—a provision added by the BAPCPA to preclude § 506(a) bifurcation. See

11 U.S.C. § 1325(a)(*); In re Barrett, 543 F.3d 1239, 1243 (11th Cir. 2008). In 

finding that the purpose of the hanging paragraph was to benefit secured creditors, 

Graupner noted the title of the BAPCPA section that added the hanging paragraph: 

“Giving Secured Creditors Fair Treatment in Chapter 13.” 537 F.3d at 1297-98, 

1302. 

The effect of § 506(a)(2) is different than that of the hanging paragraph.

3

Further, to the extent the title of the enacting BAPCPA section—“Fair Valuation of 

Collateral”—is indicative of the legislative intent for adding § 506(a)(2), our 

construction is consistent. See Bankruptcy Abuse Prevention and Consumer 

Protection Act of 2005, Pub. L. No. 109-8, § 327, 119 Stat. 23, 99 (2005).

Congress may believe that a replacement value standard provides a “fair valuation”

for cases falling within the scope of § 506(a)(2). Santander’s assertion that it is

unfair to secured creditors is a policy argument that cannot overcome the plain 

 3 The court in In re Rodriguez, 375 B.R. 535 (B.A.P. 9th Cir. 2007) speculated that the hanging 

paragraph was added to protect secured creditors from § 506(a)(2)’s valuation standard. Id. at 

544 (“We suspect, but do not decide, that there is one very important reason why Congress chose 

to suspend section 506 from its application to section 1325(a)(5)(C)’s surrender option. . . . 

Section 506(a)(2)’s applicability is not limited to the retention, anti-cramdown option of section 

1325(a)(5)(B). Thus, without the hanging paragraph, upon surrender of a 910 vehicle, the 

‘replacement value’ would be used to reduce the total amount owed to the 910 creditor, rather 

than the amount actually realized on liquidation. That would inevitably lead to a smaller 

deficiency claim. By rendering section 506(a)(2) unavailable following surrender, there is no 

artificially inflated reduction of the total debt . . . .” (footnote omitted)).

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textual indication of § 506(a)(2): that Congress did not intend to limit § 506(a)(2)

to cases where the debtor retains collateral under § 1325(a)(5)(B). See Lamie v. 

U.S. Trustee, 540 U.S. 526, 542, 124 S. Ct. 1023, 1034 (2004) (“If Congress 

enacted into law something different from what it intended, then it should amend 

the statute to conform it to its intent. . . . In the meantime, we must determine 

intent from the statute before us.”).

The district court’s order affirming the bankruptcy court is AFFIRMED. 

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