May 2010 Western Dist. of KY Bankruptcy Court Memorandum-Opinion Sum...

Debtors took a loan to purchase a manufactured home and granted Lender a mortgage on the associated real estate. The closing documents demonstrated that Debtors agreed to follow the procedure to have the manufactured home deemed part of the real estate under Kentucky law. After Debtors failed to follow the procedure, Lender procured an Order from state court deeming the manufactured home part of the real estate, thereby perfecting Lender's lien. Shortly thereafter, Debtors filed bankruptcy and attempted to avoid the lien perfection/transfer under 11 U.S.C. Section 522(h). The Court initially noted that a transfer may only be avoided under Section 522(h) in circumstances where the transfer was not voluntary. The Court further noted that the loan closing documents demonstrated the Debtors' intent to voluntarily transfer a security interest in the manufactured home, and, therefore, the Court granted judgment to the Lender.

Debtors filed a motion to set aside a security interest in certain personal property under 11 U.S.C. Section 522(f)(1). That statute allows a debtor to avoid a nonpossessory, nonpurchase-money lien on personal property to the extent the lien impairs the value of the debtor's exemption. However, Debtors failed to list in the motion the aggregate value of the personal property at issue. Thus, the Court denied the motion.