As noted in a previous post here, bankruptcy courts in Florida have been holding that when a homeowner chooses to surrender their property in a Chapter 7 bankruptcy, accepting the benefit of a waiver of the personal liability under the note, that the homeowner gives up the right to later defend the foreclosure case.
Another bankruptcy court has issued a similar opinion and holding. In re Calzadilla, 14-11318-RAM, 25 Fla. L. Weekly Fed. B254a (Bankr. S.D. Fla. June 16, 2015).
The debtor in this case proposed a chapter 13 plan which required the parties would engage in mortgage modification mediation and if mediation were unsuccessful, the debtor would “surrender” the real property. Then after an impasse at mediation, the debtor moved to amend the plan to provide for treatment of the property outside the plan and stay relief. The lender objected in part to the proposed amendment since the court’s mortgage modification mediation procedures required “surrender.”
Therefore, the lender requested language be included in the amended plan that the debtor may not contest the lender’s right to complete its foreclosure. The debtor opposed adding such language.
The Court denied the debtors’ motion, and held that, “the Court’s MMM Procedures explicitly require ‘surrender’ and ‘surrender’ means that debtors cannot thereafter take any overt action to defend or impede the foreclosure.”
This ruling is consistent with a growing body of case law that applies a common sense approach to the term “surrender” which prevents foreclosure defense. See e.g. In re Failla, 529 B.R. 786 (Bankr. S.D. Fla. 2014) (holding that debtors’ defense of foreclosure action did “not comport with the definition of ‘surrender’”),In re Metzler, 2015 WL 2330131 (Bankr. M.D. Fla., May 13, 2015); In re Trout, Case No. 13-39869 (S.D. Fla. 2014).