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Help understanding mobile home lien after discharge?

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    Help understanding mobile home lien after discharge?

    My chapter 13 has been discharged. One of the reasons I filed 13 instead of 7 is because I have a mobile home that could be crammed down and included in the 13. I got a notice from the mortgage company today that says "the mortgage loan was charged off and they wouldn't be charging any more additional fees or interest but that the lien on the property remains in place and that I remain liable for the mortgage loan obligation. The balance on the account is not being canceled or forgiven and that I will be required to pay it in the future, for example upon sale of the property." Does anyone know what in the heck this means?? I am so confused. I don't understand how the debt can be discharged yet they can still hold me liable? I am calling my attorney on Monday but would love if someone had advice or info before then.
    Thanks in advance!

    #2
    Your attorney can give you the best info. From my experience as a home owner we are no longer billed for our mortgage, but we need to pay it. They cannot collect on the debt while in Chapter 13.

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      #3
      Check with your attorney is great advice. Mobile Homes are titled like vehicles. When you do a cram down, the debt holder can't come after you for the money owed, but the title is not cleared. If you were to try and sell it, or even junk it, that lien is still on the title. My car is in this same situation. Basically, I am planning to drive it until the wheels fall off, then make a planter out of it. Your mobile home is the same way. If you live in it forever, that's fine. If you try to sell it, they are going to require payment to get the title cleared.

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        #4
        Originally posted by jqgarcia44 View Post
        My chapter 13 has been discharged. One of the reasons I filed 13 instead of 7 is because I have a mobile home that could be crammed down and included in the 13. I got a notice from the mortgage company today that says "the mortgage loan was charged off and they wouldn't be charging any more additional fees or interest but that the lien on the property remains in place and that I remain liable for the mortgage loan obligation. The balance on the account is not being canceled or forgiven and that I will be required to pay it in the future, for example upon sale of the property." Does anyone know what in the heck this means?? I am so confused. I don't understand how the debt can be discharged yet they can still hold me liable? I am calling my attorney on Monday but would love if someone had advice or info before then.
        First, let's talk about what happens when a debt is discharged and a lien remains. The simple answer is that a bankruptcy discharge, only discharges your "personal liability" for paying the debt.

        For example, you file bankruptcy and surrender your car. The car lender sells it at auction and there is a deficiency balance between the amount you owed and the final sales price. Since you filed bankruptcy, the lender could no longer collect it from you personally; since they also sold the vehicle, they also don't have any property on which their lien attaches. You are done in this case.

        Consider that you bought a car 3 years ago with a $25,000 loan. You file bankruptcy and the car is now worth $10,000 and you owe $17,000. Your attorney will file a Motion to Value which will cause the loan to be bifurcated into a $10,000 (the current fair market value of the car) secured claim and a $7,000 "unsecured" claim. If you complete your bankruptcy and only payoff the secured portion of the bifurcated claim, the unsecured claim ($7,000) is discharged as if there was no lien associated with that $7,000. This is the scenario which I think that you expected. The lender is compelled, by law, to file a notice of satisfaction or otherwise remove the lien from the property upon discharge.

        (Background on cramdowns: a cram down -- other than for interest rate only -- creates a bifurcated claim; the original claim is split into a "secured" debt and an "unsecured" debt. The Chapter 13 guarantees payment of the "secured" portion and that the "unsecured" portion will be paid from the unsecured pool based on disposable monthly income (DMI). If there isn't enough DMI to pay the entire balance of the unsecured portion, the "unsecured" portion is discharged and the lien does NOT survive. This is the most powerful part of Chapter 13s... the bifurcation of an otherwise secured claim into a secured and unsecured claim.)

        The scenario you are talking about makes no sense to me... at least 2 different ways. This is either "real property" or "personal property" under Texas law (Texas law is controlling). If this is real property, I don't know how you crammed down a "primary" residence because that's not allowed in a Chapter 13. On the other hand, if this is personal property and you crammed down the value and paid the "crammed" down amount in the Chapter 13, then you should get legal title and the lien should be lifted by the bank.

        Now this may be a "chattel"mortgage of sorts, just to add more complexity. But, my non-lawyer read is that this is ordinary personal property, secured by a chattel mortgage, but it is subject to cramdown and discharge. That means that you should have obtained title free and clear of liens, after discharge. But, that's just a guess.

        I believe that your attorney is the only one that can answer your question of whether the bank is wrong and that they are compelled to file a satisfaction of mortgage or otherwise remove their lien.
        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog


        I am not an attorney. Any advice provided is not legal advice.

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