The debtor obtained a $22,156 loan from the creditor secured by the debtor’s 1998 manufactured home. After the debtor filed for Chapter 13 bankruptcy, she valued the home at $4,980, leaving most of the loan unsecured. The creditor objected to the debtor’s valuation of the home, seeking a higher valuation to maximize its secured claim under the Chapter 13 repayment plan. The creditor hired an expert who appraised the home at $17,749. In response, the debtor submitted photos and testimony revealing extensive damage and argued for the lower valuation but did not provide an expert appraisal. The court considered both parties’ valuations to determine the home’s proper value for the Chapter 13 plan confirmation and the extent of the creditor’s secured claim.
In In re Dawson, No. 24-02832-5-JNC, 2025 WL 1245910, 2025 LX 37379 (Bankr. E.D.N.C. Apr. 29, 2025) (opinion not yet released for publication), the court found that the value of the manufactured home was $11,485. To reach this valuation, the court applied the replacement value standard under 11 U.S.C. § 506(a)(2), which requires valuing a property at the price a retail merchant would charge for it, considering its age and condition as of the petition date. The court found that the proper valuation should exclude several features that were not part of the manufactured home. Moreover, it deducted estimated costs for needed additional repairs. The court then addressed perfection of the security interest, concluding that the creditor's security interest was perfected only on the manufactured home itself and not on unattached personal property because the creditor had failed to file a UCC-1 financing statement. This distinction excluded certain items from the collateral value. The court required the debtor to submit a new bankruptcy repayment plan based on the $11,485 valuation, or it would dismiss her case.
By Daphne Williams [email protected]
Edited By Callighan Ard [email protected]
Edited By Kristin Meurer [email protected]
Edited By Hayden Mariott [email protected]