MH note cramdown by CH 13 Court

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Posted by John Merchant on August 28, 2008 at 02:29:42:

All Lonnie Deal doers, beware of new bankruptcy decision that could bite you:

8th Circuit Federal Appellate Court has just ruled that a MH in a MHP, or on leased land, is NOT protected in BK CH 13 filing, from "cramdown" in value and its value can be reduced by the BK court to "actual" value.

In Tony Coleman vs. Greentree, an appeal by Greentree from the BK Court decision in 373 BR 907, in a MO case, that Fed. Appeals Court ruled that the Greentree debt could legally be, and was thereby reduced (crammed down)from actual current balance of GT note.

So if & when you sell an old tin can for a price that's hugely over actual market value of the MH, to shaky buyers, just understand that their note to you just might be subject to BK Court "Cramdown" if they were to go file CH 13 and they were to ask the court for such a "cramdown".

Their lawyer would make that request of the court and he/she'd be derelict in his professional responsibiilty to his client if he did not so request.

The 8th Circuit ruled that a MH w/o land, was just like any other personalty (personal not real property)and was therefore not protected by BAPCPA from being crammed down.

Futhermore, from the decisions cited in Coleman, it looks to me like this is the trend nationally so it could be coming to a BK Court near you.

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