Did you know that in some Chapter 13 bankruptcy cases in Georgia, you only have to pay back the value of the mobile home to a creditor and not the entire balance owed?
For many Georgia bankruptcy filers, this can be a huge savings. For example, let’s say you owe $70,000.00 on a mobile home you bought ten years ago. Now, it is worth at most $10,000.00. In some bankruptcy cases, it is possible that you will only have to pay back the value ($10,000) and not the balance ($70,000.00). Many bankruptcy attorneys call this a cram down.
To cram down a mobile home, you must meet both of these requirements:
- the mobile home must not be financed along with the land that it sits on. In other words, if the manfactured home and the land are on the same note, it will be considered a residence. A residence cannot ever be crammed down. In contrast, if the manufactured is on a note all by itself, it can be treated under section 506A which will allow your bankruptcy attorney to cram it down.
- You must have purchased the manufactured home more than 910 days before your bankruptcy case is filed.
- You must pass the bankruptcy means test.
To succeed in cramming down a mobile home in a Chapter 13 bankruptcy case, you must get a professional appraisal before the case is filed. When choosing an appraiser, you must find someone who has experience appraising manufactured homes and is qualified to testify about the value. Also, you need an appraiser who is willing to come to court and testify on your behalf. If the mobile home creditor challenges your appraisal, they will get their own appraiser.
Next, they will demand to have an evidentiary hearing before the bankruptcy judge. During this hearing, the judge will hear from both appraisers. Hopefully, your appraiser will be more convincing.
Most manufactured homes plummet in value within a few years of the purchase. Also, moving a mobile home to another lot involves a tremendous amount of risks and costs.
If you are considering filing Chapter 13, your bankruptcy attorney will want to know everything you can tell him about the mobile home. Any mobile home owner who is filing should explore this option with their bankruptcy attorney.
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