THE 11th CIRCUIT RULES THAT A DEBTOR WHO ELECTS TO SURRENDER REAL PROPERTY IN BANKRUPTCY CANNOT CONTEST A FORECLOSURE IN STATE COURT
In the case of In re Failla, 838 F.3d 1170 (11th Cir. 2016), the 11th Circuit Court of Appeals resolved a split among the Bankruptcy Courts as to what “surrender” means within the context of Section 521(a)(2) of the Bankruptcy Code, by ruling that a Debtor who elects to “surrender” real property cannot oppose a foreclosure action.
The Court noted that the Bankruptcy Code does not define the meaning of the term “surrender.” However, the Court construed the term “surrender” to mean giving up a right or claim, and held that once a Debtor surrenders the property for purposes of their bankruptcy filing, he or she relinquishes their rights in the property and can no longer continue to oppose a foreclosure action in state court.
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