United States Bankruptcy Court, E. D. New York.
In re David KLEIN and Jane Klein, Debtors.
Bankruptcy No. 880-04208.
April 15, 1981.
 At confirmation hearing on Chapter 13 plan, a valuation hearing was held with 
respect to partially secured claim held by creditor. The Bankruptcy Court, C. 
Albert Parente, J., held that: (1) car in question was to be valued at amount 
which creditor would receive by its customary or commercially reasonable means 
of disposition of such vehicles; (2) proper date to value the collateral was 
date of valuation hearing, provided the plan was confirmed within a reasonable 
time thereafter; however, in a situation such as the case at bar, where a 
significant period of time passed since the date of valuation hearing, 
adjustments should be made for any increase or decrease in value which may have 
occurred during that time; and (3) court would decline to fix discount rate at 
the interest rate set forth in the consumer credit contract, to wit, 19.56%; 
rather, the creditor was entitled to a discount rate on its secured claim in the 
amount set forth in debtors' amended plan, 12 percent.
 Order accordingly.
West Headnotes
[1] Bankruptcy  2852
51k2852 Most Cited Cases
(Formerly 51k310(2))
Under the Bankruptcy Code, creditor has a secured claim to extent of value of 
collateral.  Bankr.Code, 11 U.S.C.A. § §  506, 506(a).
[2] Bankruptcy  2852
51k2852 Most Cited Cases
(Formerly 51k310(2))
Where collateral securing creditor's claim is valued at less than face amount of 
the claim, creditor's claim is divided into two parts:  an allowed secured claim 
which is equal to the value of the collateral, and an allowed unsecured claim 
for the deficiency.  Bankr.Code, 11 U.S.C.A. § §  506, 506(a).
[3] Bankruptcy  2852
51k2852 Most Cited Cases
(Formerly 51k310(2))
As regards Bankruptcy Code provision whereby a creditor has a secured claim to 
the extent of the value of the collateral, the legislative history of said 
provision indicates that the concept of value is to be flexible and grants 
discretion to the courts to determine value on a case-by-case basis, taking into 
account the facts and competing interests in each case.  Bankr.Code, 11 U.S.C.A. 
§ §  506, 506(a).
[4] Bankruptcy  2852
51k2852 Most Cited Cases
(Formerly 51k1108)
In Chapter 13 proceeding, the debtors' car, which they purchased by placing a 
cash downpayment and executing a consumer credit contract for the balance, was 
to be valued at an amount which the creditor would receive by its customary or 
commercially reasonable means of disposition of such vehicles, and under the 
Bankruptcy Code the creditor had a secured claim to the extent of such value. 
Bankr.Code, 11 U.S.C.A. § §  506, 506(a).
[5] Bankruptcy  3708(6)
51k3708(6) Most Cited Cases
(Formerly 51k3708, 51k1108)
Proper date to value a secured creditor's collateral is the date of valuation 
hearing, provided the Chapter 13 plan is confirmed within a reasonable time 
thereafter;  however, in situations where a significant period of time has 
passed since the date of valuation hearing, adjustments should be made for any 
increase or decrease in value which may have occurred during that time. 
Bankr.Code, 11 U.S.C.A. § §  1301 et seq., 1325(a)(5)(B)(ii).
[6] Bankruptcy  3708(5)
51k3708(5) Most Cited Cases
(Formerly 51k3708, 51k1109(6), 51k1109, 392k13)
Under the language of Chapter 13 "cram down" provisions, creditor must receive 
the present value equivalent of the allowed amount of its secured claim. 
Bankr.Code, 11 U.S.C.A. §  1325(a)(5)(B)(ii).
[7] Bankruptcy  3708(6)
51k3708(6) Most Cited Cases
(Formerly 51k3708, 51k1108)
To compute the "present value" of a creditor's secured claim in a Chapter 13 
proceeding requires the court to determine what the present worth is of a 
proposed stream of fixed payments over the life of the plan, and to accomplish 
this task, the payments are "discounted" to determine their present value;  as a 
practical matter, the court is in effect computing an interest rate to be 
applied to the amount of the creditor's allowed secured claim.  Bankr.Code, 11 
U.S.C.A. §  1325(a)(5)(B)(ii).
[8] Bankruptcy  2853.30
51k2853.30 Most Cited Cases
(Formerly 51k2853, 51k1108)
For purposes of fixing the value of a creditor's secured claim, Bankruptcy Code 
permits the secured claim to include reasonable interest together with any 
reasonable fees, costs or charges provided for in the security agreement when 
value of collateral exceeds amount of allowed secured claim;  on the other hand, 
the "discount rate" does not become part of the secured claim, but is instead 
incremental adjustments to the secured claim to compensate the creditor for 
depreciation of the collateral over the term of the Chapter 13 plan. Bankr.Code, 
11 U.S.C. § §  506(b), 1325(a)(5)(B)(ii).
[9] Bankruptcy  3708(6)
51k3708(6) Most Cited Cases
(Formerly 51k3708, 51k1109(6), 51k1109)
In Chapter 13 proceeding, creditor was entitled to a discount rate on its 
secured claim in the amount set forth in debtors' amended plan, 12 percent; 
creditor was not entitled to a discount rate at the interest rate set forth in 
consumer credit contract, to wit, 19.56 percent, as creditor failed to adduce 
any evidence to demonstrate that value of vehicle in question would depreciate 
by 19.56% over the life of the plan.  Bankr.Code, 11 U.S.C.A. § §  506(b), 
1325(a)(5)(B)(ii).
 *658 Donner, Fagelson, Hariton & Berka, P. C., Bay Shore, N. Y., for debtors.
 Murov & Ades, Lindenhurst, N. Y., for GMAC.
 Kenneth Kirschenbaum, Garden City, N. Y., Trustee.
 *659 C. ALBERT PARENTE, Bankruptcy Judge.
 On July 23, 1980, David and Jane Klein (hereinafter "debtors") filed a petition 
in bankruptcy under Chapter 13 of the Bankruptcy Code. At the confirmation 
hearing held on November 18, 1980, the Court held a valuation hearing with 
respect to the partially secured claim held by General Motors Acceptance 
Corporation (hereinafter "GMAC").
 A summary of the pertinent facts elicited at the hearing held on November 18, 
1980, follows.
 (1) On October 18, 1979, the debtors purchased a 1976 Chevrolet Caprice station 
wagon for the sum of $3,735.25. The debtors financed said purchase by placing a 
cash down-payment in the sum of $1,335.25 and executing a consumer credit 
contract with GMAC in the amount of $3,244.68.
 (2) The debtors, in theirChapter 13 petition, listed GMAC's claim as secured in 
the amount of $1,394.86 and unsecured in the amount of $1,759.69. The debtors 
fixed the value of the collateral in question at $1,394.86.
 (3) Consistent with the debtors' listing of GMAC's claim in the petition, the 
plan provided for the full payment of GMAC's secured claim plus a discount rate 
of 12 percent over the term of the plan. The plan further provided for payment 
of 18 percent of the unsecured portion of GMAC's claim.
 (4) On September 4, 1980, GMAC filed a proof of claim in the sum of $3,286.74 
and rejected the debtors' plan.
 (5) On November 5, 1980, the debtors submitted an amended plan increasing the 
value of GMAC's secured claim to $1,650.
 (6) At the valuation hearing, the expert witness for the debtors, Angelo 
Merolla, set the wholesale value of the car at $1,100 and the retail value at 
$1,600. The expert witness for the creditor, Paul Dombrowski, set the wholesale 
value at $1,850 and the retail value at $2,475.
 (7) As of the date of this decision, the debtors' amended plan has not been 
confirmed.
 The above findings of fact give rise to the following issues:
 (1) Pursuant to 11 U.S.C. Section 506(a), what method of valuation should be 
used to fix a secured claim where the collateral consists of an automobile.
 (2) Pursuant to 11 U.S.C. Section 1325(a)(5)(B)(ii), as of what date should a 
secured claim be valued.
 (3) What is the appropriate discount rate to be paid on GMAC's secured claim in 
the case at bar.
I.
 [1] Section 506 of the Bankruptcy Code provides that a creditor has a secured 
claim to the extent of the value of the collateral. 11 U.S.C. Section 506(a); In 
re Jones, 5 B.R. 736, 6 B.C.D. 965 (Bkrtcy.E.D.Va.1980); In re Cooper, 7 B.R. 
537, 7 B.C.D. 24 (Bkrtcy.N.D.Ga.1980).
 [2] Where the collateral securing the creditor's claim is valued less than the 
face amount of the claim, as in the case at bar, the creditor's claim is divided 
into two parts: an allowed secured claim which is equal to the value of the 
collateral and an allowed unsecured claim for the deficiency. H.R.Rep. No. 95-
595, 95th Congr., 1st Sess., at p. 356 (1977), U.S.Code Cong. & Admin.News 1978, 
p. 5787; In re Jones, supra; In re Anderson, 6 B.R. 601, 6 B.C.D. 1155 
(Bkrtcy.S.D.Ohio 1980).
 Although Section 506(a) sets forth general principles for the courts to follow 
when called upon to determine the value of a creditor's secured claim, the 
statutory language does not offer specific guidelines on the question. In re 
Jones, supra. The statute is extremely flexible and states simply that "(s) uch 
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." 11 U.S.C. Section 506(a).
 [3] The legislative history, while equally as general as the statutory language 
of *660 Section 506(a), does indicate that the concept of value is to be 
flexible and grants discretion to the courts to determine value on a case-by-
case basis, taking into account the facts and competing interests in each case. 
H.R.Rep. No. 95-595, 95th Congr., 1st Sess., at p. 356 (1977); In re Jones, 
supra.
 A review of the reported decisions on the issue presented indicates that there 
are two basic approaches that the courts have followed in determining the value 
of a secured creditor's claim under Section 506(a):
 (1) Where the collateral sought to be valued is an automobile, a majority of 
the courts have rejected the creditor's claim that the value of the automobile 
should be set at the retail price unless the creditor was in the business of 
selling cars in the retail market. The courts found the wholesale price to be 
the appropriate measure of value. See: In re Adams, 2 B.R. 313, 5 B.C.D. 1234 
(Bkrtcy.M.D.Fla.1980); In re Crockett, 3 B.R. 365 (Bkrtcy.N.D.Ill.1980).
 (2) The second approach followed by the courts entails valuing the collateral 
by applying the norm which a prudent businessman would employ to dispose of an 
asset. This approach is derived from Section 9-504(e) of the Uniform Commercial 
Code, which provides in relevant part that: "(s)ale or other disposition may be 
as a unit or in parcels and at any time and place and on any terms but every 
aspect of the disposition including the method, manner, time, place and terms 
must be commercially reasonable." (Emphasis added)
 This approach rejects the formulation of a definitive method of valuation to be 
used in all cases. Rather, the method of valuation is to be determined on a 
case-by-case basis. See: In re Savloff, 4 B.R. 285, 6 B.C.D. 349 
(Bkrtcy.E.D.Pa.1980); In re Miller, 4 B.R. 392, 6 B.C.D. 410 
(Bkrtcy.S.D.Cal.1980); In re Jones, supra; In re Cooper, supra; Section 9-504(3) 
Uniform Commercial Code (McKinney Supp.1980).
 [4] Predicated on the statutory mandate that the value of the collateral should 
be determined in light of the proposed disposition or use of such property and 
Congress's intent that the concept of value is to be flexible, the Court finds 
that the car in question should be valued at an amount which the creditor would 
receive by its customary or commercially reasonable means of disposition. Such 
an approach appears to be the alternative most consistent with the statutory 
language. In re Jones, supra.
 At the valuation hearing, Paul Dombrowski, an employee of GMAC, testified as to 
GMAC's procedure for disposing of abandoned and repossessed cars. Dombrowski 
stated that said cars are sold on a "bid" market. Although Dombrowski did not 
elaborate on this method of sale, it is evident that this procedure clearly 
contemplates a wholesale market value as opposed to a retail or forced-sale 
(liquidation) market value.
 Predicated on the aforementioned discussion, the Court concludes that the car 
in question should be valued at an amount which could be realized by GMAC in 
their normal manner of disposing of such vehicles, to wit, on a bid market. 
Thus, the value of the debtors' car is hereby affixed at $1,650.
II.
 The debtors contend that the controlling date for valuation is the date the 
Chapter 13 petition was filed. In contra-position, GMAC contends that the 
relevant date is the date of the valuation hearing.
 Pursuant to 11 U.S.C. Section 1325(a)(5)(B)(ii), the value of the collateral 
establishing the amount of the secured claim is to be determined as of the 
"effective date of the plan." See, e. g., In re Smith, 4 B.R. 12, 2 C.B.C.2d 77, 
78 (Bkrtcy.E.D.N.Y.1980).
 Neither the Bankruptcy Code nor the legislative history defines the term  
"effective date of the plan." The reported decisions indicate that the 
"effective date of the plan" is one of two dates: either the date the petition 
is filed, see: In re Adams, supra; or the date of the confirmation hearing, see: 
In re Crockett, supra; In re Busman, 5 B.R. 332 (Bkrtcy.E.D.N.Y.1980); In re 
Smith, supra.
 *661 The Court rejects the proposition that the date of valuation is the date 
of the filing of the Chapter 13 petition. This finding posits on the fact that 
setting the valuation date coordinate with the date the petition is filed does 
not take into account prospective changes in the value of the property which may 
occur during the course of administration. See: In re Jones, supra.
 For the purposes of cram down valuation, the Court will determine the value of 
the collateral as of the date of the valuation hearing, since, as a practical 
matter, confirmation will almost always follow within a brief time after this 
hearing. See, In re Jones, supra; 5 Collier on Bankruptcy, 15th Ed., Section 
1325.01 at p. 1325-23.
 [5] In comport with the foregoing principles of law, the Court finds that the 
proper date to value a secured creditor's collateral is the date of the 
valuation hearing, provided that the plan is confirmed within a reasonable time 
thereafter.
 However, in situations such as the case at bar, where a significant period of 
time has passed since the date of the valuation hearing, adjustments should be 
made for any increase or decrease in value which may have occurred during this 
time.
III.
 [6] Under the language of the Chapter 13 "cram down" provisions, the creditor 
must receive the present value equivalent of the allowed amount of its secured 
claim. 11 U.S.C. Section 1325(a)(5)(B)(ii); In re Busman, supra; In re Smith, 
supra.
 [7] To compute the "present value" of a creditor's secured claim requires the 
Court to determine what the present worth is of a proposed stream of fixed 
payments over the life of the plan. In re Hyden, 10 B.R. 21, 6 B.C.D. 1392 
(Bkrtcy.S.D.Ohio 1980). To accomplish this task, the payments are "discounted" 
to determine their present value. In re Hyden, supra. As a practical matter, the 
Court is in effect computing an interest rate to be applied to the amount of the 
creditor's allowed secured claim. In re Rogers, 6 B.R. 472, 6 B.C.D. 1214 
(Bkrtcy.S.D.Iowa 1980).
 However, such discount rate embodied in Section 1325(a)(5)(B)(ii) should not be 
confused with a creditor's right to interest on its secured claim under Section 
506(b). See: In re Hyden, supra.
 [8] For purposes of fixing the value of a creditor's secured claim,  Section 
506(b) permits the secured claim to include reasonable interest together with 
any reasonable fees, costs or charges provided for in the security agreement 
when the value of the collateral exceeds the amount of the allowed secured 
claim. 11 U.S.C. Section 506(b); In re Smith, supra; In re Rogers, supra.
 The discount rate, on the other hand, does not become part of the secured 
claim, but is instead incremental adjustments to the secured claim to compensate 
the creditor for depreciation of the collateral over the term of the plan. In re 
Crockett, supra; In re Cooper, supra.
 While the Bankruptcy Code is silent as to the value of the discount rate, the 
legislative history indicates there is a presumption that the discount rate and 
the interest rate set forth in the contract are equivalent. See: In re Smith, 
supra; H.R.Rep. No. 95-595, 95th Congr., 1st Sess., at pp. 352-353 (1977); In re 
Rogers, supra.
 Despite the presumption set forth in the legislative history, most of the 
reported decisions have declined to fix the discount rate at the interest rate 
stated in the security agreement. See: In re Lum, 1 B.R. 186, 1 C.B.C.2d 95 
(Bkrtcy.E.D.Tenn.1979); In re Weaver, 5 B.R. 522, 2 C.B.C.2d 315 
(Bkrtcy.N.D.Ga.1980); In re Hyden, supra. The rationale cited in the reported 
decisions is that the purpose of the discount rate is to protect the secured 
creditor from any loss caused to it due to the deferred payment of its claim. In 
re Lum, supra; In re Weaver, supra. It is not the purpose of the discount rate 
to produce a lender's profit. In re Lum, supra; In re Weaver, supra.
 [9] Therefore, predicated on the aforementioned principles of law, the Court 
declines to fix the discount rate at the interest rate set forth in the consumer 
credit contract, *662 to wit, 19.56 percent. GMAC failed to adduce any evidence 
to demonstrate that the value of the car in question would depreciate by 19.56 
percent over the life of the plan. To fix the discount rate in the case at bar 
at 19.56 percent would violate the mandate that the determination of the value 
question in issue must be made to reach a result that is fair and equitable for 
both the creditor and the debtor. See: In re Hyden, supra.
 Absent evidence to the contrary, the Court finds that the method of calculating 
the discount rate which best comports with legal and equitable considerations 
found in the Bankruptcy Code, the legislative history and the reported decisions 
is to take the average of the legal rate of interest in the State of New York (6 
percent) and the rate of interest set forth in the consumer credit contract 
(19.56 percent).
 In light of both legal and equitable considerations, the Court fixes the 
discount rate in the case at bar at 12 percent.
 CONCLUSION
 Premised on the aforementioned findings of fact and principles of law, the 
Court concludes:
 (1) the proper method of valuation in the case at bar is the amount which GMAC 
would realize by its normal means of disposing of such collateral, i. e., 
commercially reasonable means;
 (2) the value of the collateral in question is set at $1,650;
 (3) the collateral of GMAC is to be valued as of the date of the valuation 
hearing; and
 (4) GMAC is entitled to a discount rate on its secured claim in the amount set 
forth in the debtors' amended plan, 12 percent.
10 B.R. 657, 4 Collier Bankr.Cas.2d 412, 7 Bankr.Ct.Dec. 668
END OF DOCUMENT
United States Bankruptcy Court, E. D. New York.
In re David KLEIN and Jane Klein, Debtors.
Bankruptcy No. 880-04208.
April 15, 1981.

 At confirmation hearing on Chapter 13 plan, a valuation hearing was held with respect to partially secured claim held by creditor. The Bankruptcy Court, C. Albert Parente, J., held that: (1) car in question was to be valued at amount which creditor would receive by its customary or commercially reasonable means of disposition of such vehicles; (2) proper date to value the collateral was date of valuation hearing, provided the plan was confirmed within a reasonable time thereafter; however, in a situation such as the case at bar, where a significant period of time passed since the date of valuation hearing, adjustments should be made for any increase or decrease in value which may have occurred during that time; and (3) court would decline to fix discount rate at the interest rate set forth in the consumer credit contract, to wit, 19.56%; rather, the creditor was entitled to a discount rate on its secured claim in the amount set forth in debtors' amended plan, 12 percent.
 Order accordingly.

West Headnotes
[1] Bankruptcy  285251k2852 Most Cited Cases (Formerly 51k310(2))
Under the Bankruptcy Code, creditor has a secured claim to extent of value of collateral.  Bankr.Code, 11 U.S.C.A. § §  506, 506(a).
[2] Bankruptcy  285251k2852 Most Cited Cases (Formerly 51k310(2))
Where collateral securing creditor's claim is valued at less than face amount of the claim, creditor's claim is divided into two parts:  an allowed secured claim which is equal to the value of the collateral, and an allowed unsecured claim for the deficiency.  Bankr.Code, 11 U.S.C.A. § §  506, 506(a).
[3] Bankruptcy  285251k2852 Most Cited Cases (Formerly 51k310(2))
As regards Bankruptcy Code provision whereby a creditor has a secured claim to the extent of the value of the collateral, the legislative history of said provision indicates that the concept of value is to be flexible and grants discretion to the courts to determine value on a case-by-case basis, taking into account the facts and competing interests in each case.  Bankr.Code, 11 U.S.C.A. § §  506, 506(a).
[4] Bankruptcy  285251k2852 Most Cited Cases (Formerly 51k1108)
In Chapter 13 proceeding, the debtors' car, which they purchased by placing a cash downpayment and executing a consumer credit contract for the balance, was to be valued at an amount which the creditor would receive by its customary or commercially reasonable means of disposition of such vehicles, and under the Bankruptcy Code the creditor had a secured claim to the extent of such value. Bankr.Code, 11 U.S.C.A. § §  506, 506(a).
[5] Bankruptcy  3708(6)51k3708(6) Most Cited Cases (Formerly 51k3708, 51k1108)
Proper date to value a secured creditor's collateral is the date of valuation hearing, provided the Chapter 13 plan is confirmed within a reasonable time thereafter;  however, in situations where a significant period of time has passed since the date of valuation hearing, adjustments should be made for any increase or decrease in value which may have occurred during that time. Bankr.Code, 11 U.S.C.A. § §  1301 et seq., 1325(a)(5)(B)(ii).
[6] Bankruptcy  3708(5)51k3708(5) Most Cited Cases (Formerly 51k3708, 51k1109(6), 51k1109, 392k13)
Under the language of Chapter 13 "cram down" provisions, creditor must receive the present value equivalent of the allowed amount of its secured claim. Bankr.Code, 11 U.S.C.A. §  1325(a)(5)(B)(ii).
[7] Bankruptcy  3708(6)51k3708(6) Most Cited Cases (Formerly 51k3708, 51k1108)
To compute the "present value" of a creditor's secured claim in a Chapter 13 proceeding requires the court to determine what the present worth is of a proposed stream of fixed payments over the life of the plan, and to accomplish this task, the payments are "discounted" to determine their present value;  as a practical matter, the court is in effect computing an interest rate to be applied to the amount of the creditor's allowed secured claim.  Bankr.Code, 11 U.S.C.A. §  1325(a)(5)(B)(ii).
[8] Bankruptcy  2853.3051k2853.30 Most Cited Cases (Formerly 51k2853, 51k1108)
For purposes of fixing the value of a creditor's secured claim, Bankruptcy Code permits the secured claim to include reasonable interest together with any reasonable fees, costs or charges provided for in the security agreement when value of collateral exceeds amount of allowed secured claim;  on the other hand, the "discount rate" does not become part of the secured claim, but is instead incremental adjustments to the secured claim to compensate the creditor for depreciation of the collateral over the term of the Chapter 13 plan. Bankr.Code, 11 U.S.C. § §  506(b), 1325(a)(5)(B)(ii).
[9] Bankruptcy  3708(6)51k3708(6) Most Cited Cases (Formerly 51k3708, 51k1109(6), 51k1109)
In Chapter 13 proceeding, creditor was entitled to a discount rate on its secured claim in the amount set forth in debtors' amended plan, 12 percent; creditor was not entitled to a discount rate at the interest rate set forth in consumer credit contract, to wit, 19.56 percent, as creditor failed to adduce any evidence to demonstrate that value of vehicle in question would depreciate by 19.56% over the life of the plan.  Bankr.Code, 11 U.S.C.A. § §  506(b), 1325(a)(5)(B)(ii). *658 Donner, Fagelson, Hariton & Berka, P. C., Bay Shore, N. Y., for debtors.
 Murov & Ades, Lindenhurst, N. Y., for GMAC.
 Kenneth Kirschenbaum, Garden City, N. Y., Trustee.


 *659 C. ALBERT PARENTE, Bankruptcy Judge.
 On July 23, 1980, David and Jane Klein (hereinafter "debtors") filed a petition in bankruptcy under Chapter 13 of the Bankruptcy Code. At the confirmation hearing held on November 18, 1980, the Court held a valuation hearing with respect to the partially secured claim held by General Motors Acceptance Corporation (hereinafter "GMAC").
 A summary of the pertinent facts elicited at the hearing held on November 18, 1980, follows.
 (1) On October 18, 1979, the debtors purchased a 1976 Chevrolet Caprice station wagon for the sum of $3,735.25. The debtors financed said purchase by placing a cash down-payment in the sum of $1,335.25 and executing a consumer credit contract with GMAC in the amount of $3,244.68.
 (2) The debtors, in theirChapter 13 petition, listed GMAC's claim as secured in the amount of $1,394.86 and unsecured in the amount of $1,759.69. The debtors fixed the value of the collateral in question at $1,394.86.
 (3) Consistent with the debtors' listing of GMAC's claim in the petition, the plan provided for the full payment of GMAC's secured claim plus a discount rate of 12 percent over the term of the plan. The plan further provided for payment of 18 percent of the unsecured portion of GMAC's claim.
 (4) On September 4, 1980, GMAC filed a proof of claim in the sum of $3,286.74 and rejected the debtors' plan.
 (5) On November 5, 1980, the debtors submitted an amended plan increasing the value of GMAC's secured claim to $1,650.
 (6) At the valuation hearing, the expert witness for the debtors, Angelo Merolla, set the wholesale value of the car at $1,100 and the retail value at $1,600. The expert witness for the creditor, Paul Dombrowski, set the wholesale value at $1,850 and the retail value at $2,475.
 (7) As of the date of this decision, the debtors' amended plan has not been confirmed.
 The above findings of fact give rise to the following issues:
 (1) Pursuant to 11 U.S.C. Section 506(a), what method of valuation should be used to fix a secured claim where the collateral consists of an automobile.
 (2) Pursuant to 11 U.S.C. Section 1325(a)(5)(B)(ii), as of what date should a secured claim be valued.
 (3) What is the appropriate discount rate to be paid on GMAC's secured claim in the case at bar.
I.
 [1] Section 506 of the Bankruptcy Code provides that a creditor has a secured claim to the extent of the value of the collateral. 11 U.S.C. Section 506(a); In re Jones, 5 B.R. 736, 6 B.C.D. 965 (Bkrtcy.E.D.Va.1980); In re Cooper, 7 B.R. 537, 7 B.C.D. 24 (Bkrtcy.N.D.Ga.1980).
 [2] Where the collateral securing the creditor's claim is valued less than the face amount of the claim, as in the case at bar, the creditor's claim is divided into two parts: an allowed secured claim which is equal to the value of the collateral and an allowed unsecured claim for the deficiency. H.R.Rep. No. 95-595, 95th Congr., 1st Sess., at p. 356 (1977), U.S.Code Cong. & Admin.News 1978, p. 5787; In re Jones, supra; In re Anderson, 6 B.R. 601, 6 B.C.D. 1155 (Bkrtcy.S.D.Ohio 1980).
 Although Section 506(a) sets forth general principles for the courts to follow when called upon to determine the value of a creditor's secured claim, the statutory language does not offer specific guidelines on the question. In re Jones, supra. The statute is extremely flexible and states simply that "(s) uch 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." 11 U.S.C. Section 506(a).
 [3] The legislative history, while equally as general as the statutory language of *660 Section 506(a), does indicate that the concept of value is to be flexible and grants discretion to the courts to determine value on a case-by-case basis, taking into account the facts and competing interests in each case. H.R.Rep. No. 95-595, 95th Congr., 1st Sess., at p. 356 (1977); In re Jones, supra.
 A review of the reported decisions on the issue presented indicates that there are two basic approaches that the courts have followed in determining the value of a secured creditor's claim under Section 506(a):
 (1) Where the collateral sought to be valued is an automobile, a majority of the courts have rejected the creditor's claim that the value of the automobile should be set at the retail price unless the creditor was in the business of selling cars in the retail market. The courts found the wholesale price to be the appropriate measure of value. See: In re Adams, 2 B.R. 313, 5 B.C.D. 1234 (Bkrtcy.M.D.Fla.1980); In re Crockett, 3 B.R. 365 (Bkrtcy.N.D.Ill.1980).
 (2) The second approach followed by the courts entails valuing the collateral by applying the norm which a prudent businessman would employ to dispose of an asset. This approach is derived from Section 9-504(e) of the Uniform Commercial Code, which provides in relevant part that: "(s)ale or other disposition may be as a unit or in parcels and at any time and place and on any terms but every aspect of the disposition including the method, manner, time, place and terms must be commercially reasonable." (Emphasis added)
 This approach rejects the formulation of a definitive method of valuation to be used in all cases. Rather, the method of valuation is to be determined on a case-by-case basis. See: In re Savloff, 4 B.R. 285, 6 B.C.D. 349 (Bkrtcy.E.D.Pa.1980); In re Miller, 4 B.R. 392, 6 B.C.D. 410 (Bkrtcy.S.D.Cal.1980); In re Jones, supra; In re Cooper, supra; Section 9-504(3) Uniform Commercial Code (McKinney Supp.1980).
 [4] Predicated on the statutory mandate that the value of the collateral should be determined in light of the proposed disposition or use of such property and Congress's intent that the concept of value is to be flexible, the Court finds that the car in question should be valued at an amount which the creditor would receive by its customary or commercially reasonable means of disposition. Such an approach appears to be the alternative most consistent with the statutory language. In re Jones, supra.
 At the valuation hearing, Paul Dombrowski, an employee of GMAC, testified as to GMAC's procedure for disposing of abandoned and repossessed cars. Dombrowski stated that said cars are sold on a "bid" market. Although Dombrowski did not elaborate on this method of sale, it is evident that this procedure clearly contemplates a wholesale market value as opposed to a retail or forced-sale (liquidation) market value.
 Predicated on the aforementioned discussion, the Court concludes that the car in question should be valued at an amount which could be realized by GMAC in their normal manner of disposing of such vehicles, to wit, on a bid market. Thus, the value of the debtors' car is hereby affixed at $1,650.
II.
 The debtors contend that the controlling date for valuation is the date the Chapter 13 petition was filed. In contra-position, GMAC contends that the relevant date is the date of the valuation hearing.
 Pursuant to 11 U.S.C. Section 1325(a)(5)(B)(ii), the value of the collateral establishing the amount of the secured claim is to be determined as of the "effective date of the plan." See, e. g., In re Smith, 4 B.R. 12, 2 C.B.C.2d 77, 78 (Bkrtcy.E.D.N.Y.1980).
 Neither the Bankruptcy Code nor the legislative history defines the term  "effective date of the plan." The reported decisions indicate that the "effective date of the plan" is one of two dates: either the date the petition is filed, see: In re Adams, supra; or the date of the confirmation hearing, see: In re Crockett, supra; In re Busman, 5 B.R. 332 (Bkrtcy.E.D.N.Y.1980); In re Smith, supra.
 *661 The Court rejects the proposition that the date of valuation is the date of the filing of the Chapter 13 petition. This finding posits on the fact that setting the valuation date coordinate with the date the petition is filed does not take into account prospective changes in the value of the property which may occur during the course of administration. See: In re Jones, supra.
 For the purposes of cram down valuation, the Court will determine the value of the collateral as of the date of the valuation hearing, since, as a practical matter, confirmation will almost always follow within a brief time after this hearing. See, In re Jones, supra; 5 Collier on Bankruptcy, 15th Ed., Section 1325.01 at p. 1325-23.
 [5] In comport with the foregoing principles of law, the Court finds that the proper date to value a secured creditor's collateral is the date of the valuation hearing, provided that the plan is confirmed within a reasonable time thereafter.
 However, in situations such as the case at bar, where a significant period of time has passed since the date of the valuation hearing, adjustments should be made for any increase or decrease in value which may have occurred during this time.
III.
 [6] Under the language of the Chapter 13 "cram down" provisions, the creditor must receive the present value equivalent of the allowed amount of its secured claim. 11 U.S.C. Section 1325(a)(5)(B)(ii); In re Busman, supra; In re Smith, supra.
 [7] To compute the "present value" of a creditor's secured claim requires the Court to determine what the present worth is of a proposed stream of fixed payments over the life of the plan. In re Hyden, 10 B.R. 21, 6 B.C.D. 1392 (Bkrtcy.S.D.Ohio 1980). To accomplish this task, the payments are "discounted" to determine their present value. In re Hyden, supra. As a practical matter, the Court is in effect computing an interest rate to be applied to the amount of the creditor's allowed secured claim. In re Rogers, 6 B.R. 472, 6 B.C.D. 1214 (Bkrtcy.S.D.Iowa 1980).
 However, such discount rate embodied in Section 1325(a)(5)(B)(ii) should not be confused with a creditor's right to interest on its secured claim under Section 506(b). See: In re Hyden, supra.
 [8] For purposes of fixing the value of a creditor's secured claim,  Section 506(b) permits the secured claim to include reasonable interest together with any reasonable fees, costs or charges provided for in the security agreement when the value of the collateral exceeds the amount of the allowed secured claim. 11 U.S.C. Section 506(b); In re Smith, supra; In re Rogers, supra.
 The discount rate, on the other hand, does not become part of the secured claim, but is instead incremental adjustments to the secured claim to compensate the creditor for depreciation of the collateral over the term of the plan. In re Crockett, supra; In re Cooper, supra.
 While the Bankruptcy Code is silent as to the value of the discount rate, the legislative history indicates there is a presumption that the discount rate and the interest rate set forth in the contract are equivalent. See: In re Smith, supra; H.R.Rep. No. 95-595, 95th Congr., 1st Sess., at pp. 352-353 (1977); In re Rogers, supra.
 Despite the presumption set forth in the legislative history, most of the reported decisions have declined to fix the discount rate at the interest rate stated in the security agreement. See: In re Lum, 1 B.R. 186, 1 C.B.C.2d 95 (Bkrtcy.E.D.Tenn.1979); In re Weaver, 5 B.R. 522, 2 C.B.C.2d 315 (Bkrtcy.N.D.Ga.1980); In re Hyden, supra. The rationale cited in the reported decisions is that the purpose of the discount rate is to protect the secured creditor from any loss caused to it due to the deferred payment of its claim. In re Lum, supra; In re Weaver, supra. It is not the purpose of the discount rate to produce a lender's profit. In re Lum, supra; In re Weaver, supra.
 [9] Therefore, predicated on the aforementioned principles of law, the Court declines to fix the discount rate at the interest rate set forth in the consumer credit contract, *662 to wit, 19.56 percent. GMAC failed to adduce any evidence to demonstrate that the value of the car in question would depreciate by 19.56 percent over the life of the plan. To fix the discount rate in the case at bar at 19.56 percent would violate the mandate that the determination of the value question in issue must be made to reach a result that is fair and equitable for both the creditor and the debtor. See: In re Hyden, supra.
 Absent evidence to the contrary, the Court finds that the method of calculating the discount rate which best comports with legal and equitable considerations found in the Bankruptcy Code, the legislative history and the reported decisions is to take the average of the legal rate of interest in the State of New York (6 percent) and the rate of interest set forth in the consumer credit contract (19.56 percent).
 In light of both legal and equitable considerations, the Court fixes the discount rate in the case at bar at 12 percent.
 CONCLUSION
 Premised on the aforementioned findings of fact and principles of law, the Court concludes:
 (1) the proper method of valuation in the case at bar is the amount which GMAC would realize by its normal means of disposing of such collateral, i. e., commercially reasonable means;
 (2) the value of the collateral in question is set at $1,650;
 (3) the collateral of GMAC is to be valued as of the date of the valuation hearing; and
 (4) GMAC is entitled to a discount rate on its secured claim in the amount set forth in the debtors' amended plan, 12 percent.
10 B.R. 657, 4 Collier Bankr.Cas.2d 412, 7 Bankr.Ct.Dec. 668
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