## Facts

- Carlos and Vanessa Manley bought a mobile/manufactured home in 2011.
- They financed the purchase with a loan from Vanderbilt Mortgage and Finance, Inc. (Vanderbilt).
- Vanderbilt secured the loan by placing a lien on the mobile home’s certificate of title.
- The original loan amount was over $62,000, and by 2015 the Manleys owed about $57,000.
- After defaulting, the Manleys filed an individual Chapter 13 case in 2015 and proposed a plan that valued the mobile home at $20,000.
- The plan’s $20,000 valuation would limit Vanderbilt’s secured claim to that amount and treat the remaining balance as unsecured debt (a cramdown).
- Vanderbilt objected and sought a higher valuation.
- The bankruptcy court allowed Vanderbilt to obtain an appraisal; Vanderbilt’s appraiser valued the home at $43,300.
- The appraiser relied on the National Appraisal System for manufactured homes and stated that $43,300 reflected “what a normal consumer would pay for this home in this condition.”
- The appraiser also cited the home’s good overall condition and improvements that increased its value.
- The dispute came before the bankruptcy court on the plan-related request to value the secured property for Chapter 13 treatment.

## Issues

1. In an individual Chapter 13 case where the debtor keeps personal-property collateral securing a purchase-money obligation, what valuation standard applies under 11 U.S.C. § 506(a)(2)?
2. Applying that standard, should the court accept the debtors’ $20,000 figure or Vanderbilt’s appraised value of $43,300 for the mobile home?

## Decision

- The court applied 11 U.S.C. § 506(a)(2) and used a replacement-value measure tied to the retail market.
- The court rejected the Manleys’ proposed $20,000 value as inconsistent with the statutory standard and the evidentiary record.
- The court credited Vanderbilt’s appraisal evidence and valued the mobile home at $43,300.
- Vanderbilt’s claim was secured up to the court-determined value of the collateral, with any remaining loan balance treated as unsecured for Chapter 13 plan purposes.

## Legal Principles

- Under 11 U.S.C. § 506(a), a claim secured by property of the estate is a secured claim to the extent of the creditor’s interest in the collateral’s value, and an unsecured claim for any remaining amount owed.
- In an individual Chapter 13 case involving personal property, § 506(a)(2) sets the valuation rule when the debtor retains the collateral: the value is the collateral’s “replacement value” as of the petition date.
- Section 506(a)(2) defines replacement value as the price a retail seller would charge for property of the same kind, considering the property’s age and condition at the time of valuation.
- Evidence that reflects what a typical retail consumer would pay for a used item in its present condition is consistent with § 506(a)(2); a valuation that functions like liquidation or distress-sale pricing is not.
- A supported appraisal that accounts for the home’s condition and value-affecting features may be accepted as the best evidence of replacement value in a cramdown valuation dispute.

## Conclusion

In re Manley held that, for a Chapter 13 debtor retaining a mobile home that is personal property, § 506(a)(2) requires a retail replacement-value approach measured as of the petition date; based on Vanderbilt’s appraisal using the National Appraisal System and evidence of good condition and improvements, the court valued the home at $43,300 and did not accept the debtors’ $20,000 cramdown valuation.


In re Manley, 2016 WL 417322 (2016)