Issue link: https://mbozikis.ufcontent.com/i/1422521
72 A secured creditor may be considered oversecured or undersecured. If the value of the collateral secured by a lien exceeds the amount of a creditor's claim, a creditor is said to be oversecured. Oversecured creditors are entitled to postpetition interest and reasonable fees, costs, or charges provided under an agreement or State statute. 11 U.S.C. § 506(b). However, if the value of the creditor's interest in the collateral is less than the value of the claim, the creditor is said to be undersecured. According to Section 506(a)(1), an undersecured creditor has a secured claim up to the value of the collateral and an unsecured claim for any remaining claim. In a Chapter 11 case, an undersecured creditor may choose to elect to have the entire allowed amount of its claim treated as a secured claim pursuant to Section 1111(b). If this election is made, the creditor must receive payments on its claim which aggregate the amount of the indebtedness but have a present value equal to only the value of the collateral securing the claim. Because the value of collateral directly affects the secured status of a claim, valuation is a very important issue in a bankruptcy proceeding. Property may be valued in different amounts at different points in a case depending on the purpose for the valuation or the actual fluctuation in the value of the property. The Bankruptcy Code provides that value be determined in light of the purpose of the valuation and the proposed disposition or use of the property, and in conjunction with a hearing on the disposition or use of the property or on confirmation of a plan. 11 U.S.C. § 506(a)(1). Generally, the standard used to value collateral is one of fair market value. However, in almost all cases, the determination of fair market value will depend on the particular market and the means selected to gauge the value of the item in question. c. Priority Unsecured Claims Once secured claims have been satisfied out of the applicable collateral, the Bankruptcy Code provides that particular types of unsecured claims receive priority in payment over other unsecured