Thursday, June 25, 2015

How To Surrender Property in Bankruptcy

Bankr MD Fla: How does a Debtor SURRENDER Real Property in bankruptcy? 

I received an email from another attorney in Jacksonville, Florida, Bobby Wilbert, that states, in part:

This is a big issue here in Florida when debtors just wanna walk away and be done with it. At a minimum, "surrender" under Bankruptcy Code §§ 521 and 1325 means a debtor cannot take an overt act that impedes a secured creditor from foreclosing its interest in secured property. Although "surrender" is not defined in the Bankruptcy Code, the First and Fourth Circuits have interpreted that term to mean a debtor must relinquish any rights in the secured property—including the right of possession—and make it available to the secured creditor.  

The rub in all this is, you can not make a creditor take the property.  

This becomes most relevant with properties that have homeowner association fees, which the debtor will be responsible for, post discharge.

However, fortunately, most property surrendered is by a mutual agreement between the creditor and the debtor.

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