surrender of collateral

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Creditor Cannot Be Compelled to Take Possession of Surrendered Collateral

Surrender of collateral under section 521(a)(2) is a procedural action lifting the bankruptcy stay and permitting a lienholder to exercise state remedies with respect to the collateral. Because surrender does not affect the substantive rights of the debtor or the creditor, however, the debtor could not compel the creditor to take possession or release the lien. In re Loucks, 619 B.R. 908 (Bankr. E.D. Mich. Oct. 9, 2020) (case no. 20-42265). [Read more…] about Creditor Cannot Be Compelled to Take Possession of Surrendered Collateral

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Lienholder May Seek Value for Post-Discharge Release of Lien

The discharge injunction does not prohibit a lienholder from seeking value for release of its lien so long as, under the specific facts of the case, its conduct is not an improper attempt to coerce repayment of the discharged debt. Bentley v. OneMain Financial Group, No. 19-8026 (B.A.P. 6th Cir. July 8, 2020). [Read more…] about Lienholder May Seek Value for Post-Discharge Release of Lien

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Forced Vesting Does Not Satisfy Confirmation Requirements

Section 1322(b)(9) does not permit a court to confirm a plan vesting surrendered property in an unwilling creditor. Wells Fargo v. Sagendorph, No. 15-40117 (D. Mass. Jan. 23, 2017).

Paul Sagendorph’s chapter 13 plan proposed to surrender property on which Wells Fargo held the sole lien, and vest title in Wells Fargo notwithstanding Wells Fargo’s objection. The bankruptcy court held that the Code permitted Mr. Sagendorph’s treatment of the secured debt and confirmed the plan. In re Sagendorph, No. 14-41675 (Bankr. D. Mass. June 2015). [Read more…] about Forced Vesting Does Not Satisfy Confirmation Requirements

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Surrender Ends State Foreclosure Fight

“Debtors who surrender their property in Bankruptcy may not oppose a foreclosure action in state court.” Failla v. Citibank, No. 15-15626 (11th Cir. Oct. 4, 2016). Bankruptcy debtors, David and Donna Failla, opted, under section 521(a)(2)(B), to surrender their home but continued to live in the house and oppose Citibank’s state court foreclosure action. The trustee abandoned the property as having negative value. Citibank moved to compel surrender. The bankruptcy court granted the motion ordering the Faillas to cease opposition to foreclosure in the state court. The district court affirmed. [Read more…] about Surrender Ends State Foreclosure Fight

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Same District, Same Day, Different Conclusions on Surrender Plus Vesting

Two bankruptcy courts in Massachusetts faced with objections to confirmation of plans that proposed the debtor’s surrender of residential property and vesting of title in that property in the mortgagee reached opposite conclusions. In re Brown, No. 14-12357 (Bankr. D. Mass. March 4, 2016). In re Tosi, No. 13-14017 (Bankr. D. Mass. March 4, 2016). [Read more…] about Same District, Same Day, Different Conclusions on Surrender Plus Vesting

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Creditor’s Motion to Reopen Is Too Late

The doctrine of laches applied a fatal blow to the creditor’s motion to reopen to compel surrender. In re Kourogenis, 2015 Bankr. LEXIS 3400, No. 09-32936 (Bankr. S.D. Fla. Oct. 7, 2015). Five years after discharge, a creditor, Green Tree Servicing, sought to reopen Ms. Kourogenis’s chapter 7 bankruptcy to compel surrender of real property which Ms. Kourogenis had opted to surrender in her Statement of Intentions. The court denied the motion. [Read more…] about Creditor’s Motion to Reopen Is Too Late

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Plan May Vest Surrendered Property in Creditor

The bankruptcy court for the Eastern District of New York confirmed the debtors’ chapter 13 plan which provided for surrendering their residential property and vesting title in the creditor over that creditor’s objection. HSBC Bank v. Zair, No. 14-74456 (Bankr. E.D. N.Y. Aug. 13, 2015).

[Read more…] about Plan May Vest Surrendered Property in Creditor

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Court Denies Bank’s Motion to Reopen and Compel Surrender

Bank of America’s failure to provide the debtor with a written reaffirmation agreement during the pendency of her bankruptcy led the court to deny its motion to reopen and compel surrender. In re Rodriguez, No. 12-12043 (Bankr. S.D. Fla. Aug. 12, 2015). [Read more…] about Court Denies Bank’s Motion to Reopen and Compel Surrender

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Plan May Include Vesting in Unwilling Creditor

A Debtor may confirm a plan that provides for transfer of title to the secured creditor even over the creditor’s objection. In re Sagendorph, No. 14-41675 (Bankr. D. Mass. June 2015).

Paul Sagendorph’s chapter 13 plan provided for certain secured property as follows:

The debtor is Surrendering his property . . . to Wells Fargo . . . in Full Satisfaction of Any and All Claims filed. Wells Fargo . . . will Foreclose on the property in full Satisfaction of the Mortgage, Note and any outstanding Fees. Pursuant to §§ 1322(b)(8) and (9), title to the property . . . shall vest in Wells Fargo . . . upon confirmation, and the Confirmation Order shall constitute a deed of conveyance of the property when recorded at the Registry of Deeds. All secured claims will be paid by surrender of the collateral and foreclosure of the security interest. [capitalization in original] [Read more…] about Plan May Include Vesting in Unwilling Creditor