The Bankruptcy Act needs to be revised in so many areas it’s difficult to point to the most important. However, the “surrender” issue is paramount because the bankruptcy court has allowed the use of electronic signatures without forethought of the consequences. Bankruptcy attorneys regularly use the surrender form to alleviate the burden and cost of dealing with motions for relief of stay – and many times unbeknownst to the homeowner. As a foreclosure paralegal I have had a number of clients that had never signed the form and questioned how their bk attorney could surrender their home. In most cases they would be given some lame excuse – and when the foreclosure attorney would request a copy of the actual signed formed – 9 times out of 10 there wasn’t one.
Bankruptcy has used electronic signatures to the point that the debtor’s bankruptcy attorney can commit unlawful acts with no penalties to be assessed. This needs to be changed. If a house and property are meant to be surrendered – a full explanation of the term “surrender” needs to be made clear and an actual signed form by the debtor document filed with the court. No electronic signatures!! Surrender that Dorothy!
Citibank Wins Foreclosure Appeal in Bankruptcy Test
Oct. 4 — Debtors who surrender property under the Bankruptcy Code can’t oppose foreclosure efforts by Citibank, a federal appeals court said Oct. 4 ( Failla v. Citibank N.A., 11th Cir., No. 15-cv-15626, 10/4/16 ).
The ruling by the U.S. Court of Appeals for the Eleventh Circuit eases foreclosures in that circuit in two ways. First, it means that a debtor who discharges mortgage debt by surrendering property under 11 U.S.C. 521(a)(2) can’t oppose creditors who then try to foreclose in state court.
The decision also speeds that process. Judge William Pryor, who wrote for a three-judge panel, said bankruptcy courts can order debtors who surrender property under Section 521(a)(2) to drop their opposition to foreclosure. The debtors said the bankruptcy court didn’t have that authority.
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