Yes, you can claim the homestead on your mobile home (manufactured home) even if you just rent the lot below it.
The 10th Circuit Bankruptcy Appellate Panel (BAP) actually ruled on this specific issue in In Re Carlson, 303 B.R. 478 (10th Cir. BAP 2004) . The court held that:
owning the land surrounding a mobile home is not a prerequisite to claiming the mobile home exempt as homestead under Utah law
In other words, your mobile home is the homestead. It doesn’t matter if you are only renting the lot. At least $42,000 of that home’s equity is safe in bankruptcy! (As long as you are on title for the mobile home).
Utah has NO exemptions to protect your tax refund when you file bankruptcy. This means that if you go bankrupt before you receive and spend your tax refund, you will lose it. The chapter 7 trustee will take your refund and use it to pay your creditors. On the other hand, if you wait just a little bit to file and receive your refund, you can spend it all before filing bankruptcy.
Just remember to spend it on exempt items.
You can definitely use it to pay your bankruptcy attorney to prepare your case.
Don’t pay off friends or family! Call me if you have any questions on how to spend it. You can even text me on a Saturday at noon as you’re standing in an RC Willey trying to decide if you should purchase the new $800 bunk bed set for the twins (yes, you can). You can text me at 801-787-8860.
The list is below, but you’re always safe with food storage, clothing, washer, dryer, refrigerator, freezer, stove.
Here is a rehash of my post on this same issue last year (and the year before):
It’s that time of year again where I have to answer the phone and tell people that I don’t want their money until February or later because of tax refund season. It makes a lean December/January in our household, but it’s the only way to protect my clients.
(I am cutting and pasting from earlier posts, so please forgive the repeat information).
So let’s say you get your refund February 1, 2016. What do you do?
Better said, what don’t you do:
1. Don’t go buy a new toy like a dirt bike or a tv.
2. Don’t pay off any friends or family. This is a preferential transfer, to an insider no less, and it results in Mom and Dad being sued by the trustee.
So what do you do:
1. Spend it on exempt items under Utah Law. This basically means food, clothing, washer, dryer, fridge, freezer, stove.
(Did you see a computer on the list? No. Don’t ask me if that’s okay. It’s not).
2. And use the rest to pay me.
So let’s say you spend the tax refund on food storage March 1st and keep all of your receipts. When can you file? March 2nd.
(C) provisions sufficient for 12 months actually provided for individual or family use;
(D) all wearing apparel of every individual and dependent, not including jewelry or furs; and
(E) all beds and bedding for every individual or dependent;
There are other items you can spend the money on, and this is by no means comprehensive, but this should give you a good idea on how to spend it. If you have questions on what to use it for, ask your attorney; that’s what he’s there for.
Basically, you take your home value, subtract your mortgage and your homestead exemption, and if there’s any money left over, judicial liens stay attached to your home. If there’s no money left over, you can remove them or avoid them in a chapter 13 bankruptcy.
(f)(1)Notwithstanding any waiver of exemptions but subject to paragraph (3), the debtor may avoid the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled under subsection (b) of this section, if such lien is—(A)a judicial lien, other than a judicial lien that secures a debt of a kind that is specified in section 523(a)(5);
Here is the best kind of example I can give you. I am cutting and pasting an email with one of my clients showing my calculations:
Sorry, it was well past my bedtime last night and I didn’t give a good full response.
Home Value/Exemptions Here are the numbers: $127000 — first mortgage $42,000 — 2nd mortgage $42,000 — homestead exemption (we can’t claim a double exemption because your wife is not on title)
= $211,000 of the home is safe (protected)
then we get to throw in a proposed 6% realtor’s fees even if someone considered sell it which is another 12,000, so
$223,000 is safe from normal creditors when we figure out repayment plan in the 13.
Stripping Judgment Liens As for judgment liens, they only attached to your house if the creditor actually takes the judgment and records it with the Utah County Recorder. With these, I cannot claim that extra $12,000 in realtor’s fees if I try to strip them.
If the home is worth less than $211,000 I can strip or remove those judgment liens. That way, if you sell or refinance one day, they never get paid because they are no longer attached. If the home is worth more than $211,000, the liens could stay attached and would eventually get paid when you sell/refinance.
Judgments that attached and became judgment liens
Here are the judgments that actually filed with the Utah County Recorder and became judgment liens (much less than we thought)
$502.87 Bonneville, attached on 10/16/2017 $6,324.45 Cavalry SPV, attached on 12/13/2018 $1,771.71 Midland, attached 1/29/2019
Judgments that are not attached and are not judgment liens Here are the judgments that did NOT become judgment liens. These are NOT attached to the home. Discover — they attached a $12,000 lien on 7/31/2017 and then released it on 11/18/2019 even though they shouldn’t have Barclays for $8k Cherrington for $3.5k
What this means is that if the home is worth over $211,000, then Bonneville attaches to the next $502.87 of value, then Cavalry to the next $6,324.34 of value, and then Midland for the next $1,771.71 of value.
As I said, it’s complicated.
Remember: even if a creditor get a judgment again you, it does not automatically attach to your home (here in Utah). After getting the judgment, the creditor still has to go file it with the County Recorder to create a judicial lien against you home.
In most cases, bankruptcy wipes out your personal liability for debts, including secured debt like mortgages and car loans. However, those secured debts are still secured (attached) to your property. In other words, the mortgage is secured by your home. If you want to keep the home, you still need to pay the debt attached to it. Even if your personal liability is wiped out, they can still come after the property if you stop paying for it.
This morning, I started going through my morning email and saw the following question from a client in a chapter 13 case:
I do not make my monthly payments for my home equity anymore do I? is the home equity not included in the bankruptcy? How am I supposed to afford paying the monthly amount to the trustee, the home equity payment, mortgage, and utility bills?
It’s valid question. The horrible answer is that you have to pay for things if you want to keep them.
Home equity lines of credit (or HELOCS) are confusing to most people. Many clients think that these are not “real” mortgages and can be wiped out like a credit card. This is wrong. A heloc is a real 2nd mortgage. It is attached to your house, and if you want to keep the property, you have to pay the loans attached to it.
Basically, if you are over, then you are a chapter 13. If you are under, then you are a chapter 7. (The current figures are at the bottom of this page).
W2 wage earner —– Normally, when I ask someone how much they make, I am trying to determine if they can qualify for a chapter 7 case. Most people can give me a straight answer because most people have steady W2 income. These cases are fairly straightforward.
High income client — If I am dealing with a person with W2 income who makes too much money, I won’t get a straight answer. They will inevitably ask the following question: “Are we talking about after all my expenses?” The annoying attorney-phrased answer is “kind of.” The moment someone says this, I know that they’ll be a complex case and most likely a chapter 13 repayment type of case. I can subtract standard IRS averaged expenses, reasonable car payments, alimony/child support, charitable contributions, and a slew of other expenses, but those expenses are generally standard expenses that average clients can take out. I just need the gross income as a starting point. I’ve come to realize that the reason they ask about expenses is because they subconsciously know that they make too much and are hoping that I can run my figures after taking out luxury items such as their $250 a month pet insurance or $950 Lexus lease. (I don’t).
Here’s a good recent example: I ask a potential client for her income and her husband’s income. She says they each make $xxx an hour. Notice that she didn’t give me a straight answer. I ask for paystubs. She only sends a recent January paystub. Over the course of 3 days and about 8 email, she finally admits: “He works a lot of OT and gets quarterly bonuses. He averages 100 hours per pay period and in the summer more. I’ll send a bunch more paystubs.” It’s been a week, and I still don’t know how much they make (gross or net). However, I’m betting that they are well above the median income, and they’ll have to be in some kind of chapter 13 repayment plan.
I begin by looking at your gross. I then take out normal, acceptable expenses. If you are “living large,” I cannot take that into account. When the US Trustee (Department of Justice) audits your case, they won’t allow me to deduct personal expenses like a $500 a month spa plan. That is not a reasonable expense, and it is an unfair detriment to your creditors (if you pay that $500 to the spa instead of your creditors). I know that it sounds unfair to the person who believes that the expense is reasonable, but there’s been enough litigation to prove that you can claim standard expenses, not luxury ones.
Self-employed client — If I’m dealing with a self-employed person, they will ask me the following question: “Are we talking about my business gross income, or the net after expenses?” If you are self-employed, then I use the gross as a starting point, but after we take out legitimate business expenses, it’s that net number that we’ll really be using.
Now remember that these numbers can be adjusted by child support payments (received or made), larger mortgages, huge tax debt, etc. It is a gross overgeneralization to say that if you are over that figure then you MUST be a chapter 13, but this is the baseline we start with. That being said, here are the current figures for Salt Lake County that we use on our Form 122 (6 month average of current monthly income and disposable income):
Married with 1 child: $81,1672
Married with 2 children: $91,810
Married with 3 children: $100,810
Married with 4 children: $109,810
Married with 5 children: $118,810
Married with 6 children: $127,810
Married with 7 children: $136,810
Married with 8 children: $145,810
Married with 9 children: $154,810
Married with 10 children: $163,810
If you have more than 10 children, you’re probably going to be below median. I have 11 children, and I know how expensive that can be.
These are the standard questions that a bankruptcy trustee will ask you at a 341 Meeting of Creditors. This doesn’t mean that these are the only questions you’ll face, but these are the most common. Unless you have some interesting asset like a family vacation home in a trust which your dad set up years ago, you should be fine.
You can discharge them in a chapter 13 (usually), but it may not be worth the extra attorney’s fees and 3 years of waiting for that to happen.
In a chapter 7, it will not discharge a debt ” to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit ….” 11 U.S.C. 523(a)(7).
This means that your traffic fines/citations will survive a chapter 7 case. That being said, if you file chapter 7 and discharge all of your other debts, that should hopefully free up enough of your monthly income to pay off the speeding tickets rather quickly.
A good rule of thumb is that priority debts like most taxes, student loans, criminal restitution, and child support/alimony survive your chapter 7 case. Everything else disappears. It goes without saying that if you’re unsure if a debt will be discharged, that you should ask a bankruptcy attorney.
As for the speeding tickets, the best way to prevent them is to (in the words of my law enforcement friends) “stop breaking the law, jackass.” Unfortunately, I seem to have a lead foot.