IN RE:  JAMES S. WILSON     CASE NO. 02-34305  Confirmation of the Chapter 13 Plan and Objection






JAMES S. WILSON                                                                         CASE NO. 02-34305


DEBTOR                                                                                           CHAPTER 13




This matter having come before the court on April 16, 2003 for confirmation of the Chapter 13 Plan and an Objection to Confirmation by IMC Mortgage Company, a Florida Corporation, as successor by merger to Industry Mortgage Company, L.P., A Delaware Limited Partnership c/o Fairbanks Capital Corporation (“IMC”).   The court heard arguments of counsel at the hearing, H. Bradley Smith representing the debtor and Amy Morgan representing creditor IMC, and having taken the matter under submission, makes the following findings of fact and issues the following conclusion of law. 


Findings of Fact

The material facts in this matter are not in dispute, and are, as found in the record and as recited in debtor’s response to IMC’s Objection to Confirmation, as follows:

1.      The debtor filed for relief under Chapter 13 of the Bankruptcy Code on November 26, 2002.  At the time of filing the petition debtor owned 1.6 acres and a 1995 Clayton mobile home placed thereon located at 130 Old Sheep Pen Road, Frankfort, Franklin County, Kentucky. 

2.      In order to finance the mobile home, debtor executed a promissory note to IMC and granted a mortgage on the realty on May 22, 1998. 

3.      IMC filed the mortgage on June 3, 1998 with the clerk of the Franklin County court.

4.      IMC did not submit a title lien statement to the clerk regarding the mobile home.

5.      Fairbanks Capital Corporation, P.O. Box 9001710, Louisville, Kentucky, 40290-1710 was among the creditors listed in debtor’s mailing list matrix.

6.      Trustee filed a report and recommendation as to confirmation on February 27, 2003.  In the report the Trustee noted “IMC Mortgage Company has a non-perfected lien on a mobile home and a valid mortgage on the land on which the mobile home sits.”

7.      Debtor filed his First Amended Plan on March 18, 2003 following the Trustee’s recommendation in which IMC was treated as a secured creditor paid inside the plan to the extent of the value of the land.

8.      IMC filed its objection to confirmation of debtor’s plan on March 21, 2003. 

9.      The mobile home sits upon the real property.

10. The mobile home is the debtors’ principal residence.



IMC’s objection presents the question to the court of whether the holder of a claim secured by real property, upon which a mobile home that is the debtors’ residence sits, is a beneficiary of the anti-modification protection provided by 11 U.S.C. § 1322(b)(2). 


Conclusions of Law

11 U.S.C. Section 1322 (b)(2) provides that the debtor’s plan may


“modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor’s principal residence...”  11 U.S.C. § 1322(b)(2) (emphasis added).


In order for IMC to avoid a modification of its rights as to the real property and the mobile home, IMC’s claim must be a claim secured only by a security interest in real property that is the debtor’s principal residence.  In the case at hand IMC and the debtors contemplated securing the mortgage of IMC by granting a security interest in both the real property and the mobile home situated thereon.  Nobelman v. American Savings Bank, 113 S. Ct. 2106, 2110 (1993) provides


“In the absence of a controlling federal rule, we generally assume that Congress has “left the determination of property rights in the assets of a bankrupt’s estate to state law,” since such “[p]roperty interests are created and defined by state law.” quoting Butner v. United States, 440 U.S. 48, 54-55, 99 S.Ct. 914, 918, 59 L.Ed.2d 136 (1979).


In its Supplemental Memorandum, IMC argues that the issue presented in this matter is solely an issue of federal law.  The court disagrees.  Kentucky law dictates the determination of IMC’s rights as to the property in question – be it real property or personal property.  Applicable Kentucky law requires owners of mobile homes to obtain a certificate of title and the perfection of any security interest in the mobile home to be perfected by a notation on the certificate of title.  KRS 186.650, 186A.070, 186A.190.  The sole means of perfecting a security interest in any property for which has been issued a Kentucky certificate of title shall be by notation on the certificate of title notwithstanding the existence of any financing statement filed under the provisions of KRS Chapter 355.  KRS 186A.190(1), (2) (emphasis added).  See also Hiers v. Bank One, West Virginia, Williamson, 946 S.W.2d 196, (Ky. App. 1996) (submission of certificate of title and title lien statement to county clerk only means of perfecting security interest in mobile home in Kentucky). 


It is undisputed that IMC did not submit a title lien statement to the county clerk regarding the mobile home.  Thus IMC is not perfected as to the mobile home and has no rights thereto under Kentucky law. 


Neither debtors nor the Trustee dispute IMC’s claim of a perfected security interest in the real property. 


IMC would have the court determine in spite of IMC’s failure to perfect the security interest in the mobile home, IMC’s claim is protected from modification due to the valid mortgage on the real property.  IMC’s argument is that the real property constitutes the debtors’ personal residence thus providing IMC with the protection of § 1322(b)(2).  To follow this argument the court then must make a determination that the real property encumbered by IMC’s mortgage is the equivalent of the debtors’ residence.  In KRS 186.650 Kentucky law provides a definition of “manufactured home” or a mobile home as a structure that may inter alia “be used as a place of residence…” KRS 186.659(3)(f).  The debtors live in the mobile home and mobile homes in the commonwealth of Kentucky must have a certificate of title.  KRS 186A.  Certificates of title are required for certain personal property within the state.  It follows that the mobile home in which debtors reside is not real property but personal property as defined by state law.  The real property in this matter is the land on which the mobile home sits and on which IMC has a perfected security interest.       


Returning to the statutory basis of IMC’s objection to debtors’ plan the court must conclude that the anti-modification protection of § 1322(b)(2) applies only if IMC’s claim is secured only by a security interest in real property that is the debtors’ principal residence.  Based on the foregoing, IMC’s mortgage is indeed secured only by a security interest in real property, however, the real property does not, under relevant Kentucky law, constitute the debtors’ principal residence.  Debtors reside in the mobile home that is personal property on which IMC is unperfected.  Thus IMC’s claim is not permitted the exception to modification afforded by 11 U.S.C. § 1322(b)(2). 



Based on the record in this case and the arguments of counsel, the court hereby finds creditor IMC Mortgage Company, L.P.’s objection to confirmation of debtor’s plan should be and is hereby OVERRULED.  Confirmation hearing before this court to be continued at the discretion of the Trustee.



Copies to:


H. Bradley Smith, Esq.

Shannon O’Connell Egan, Esq.

Beverly M. Burden, Trustee

U.S. Trustee