DEFENSES IN FLORIDA FORECLOSURE
they swore under oath in this Court that
they intended to surrender the Property
and benefitted from this declaration.”9
Sanctions May Arise
When unique circumstances
arise, the court’s patience can wear
thin. A Southern District of Florida
Bankruptcy Court debtor –
postpetition, post-discharge, and after
the above-referenced decisions by
Hyman and Mark were published –
hired separate counsel to vigorously
defend a foreclosure proceeding after
the Statement of Intention was marked
“surrender” in regard to the same real
property. In Dolan, Judge Hyman’s
response to a creditor’s motion to
compel the debtors to surrender the
foreclosure defense ended with the
following clause:
The Debtor’s Edward John Dolan or
Anne Dolan shall appear before this
Court on April 29, 2015 at 1:00p.m.
at the United States Bankruptcy
Court, Flagler Waterview Building,
1515 North Flagler Drive, Courtroom
A, Room 801, West Palm Beach,
Florida 33401 to show cause whey
they should not sanctioned for their
failure to comply with their Statement
of Intentions.0
The foreclosure defense law firm and
firm’s partner were also required to
appear at the court on the motion for
cause at the same time and date.1
Ultimately, the court delivered a
message to both the bankruptcy
attorneys as well as the state court
foreclosure defense attorneys: If your
client
checks the “surrender” box
in the bankruptcy schedules, do not
continue to defend foreclosures for the
bankrupts in the state forum.2
Interpreting the Choices
Bankruptcy software principally
agrees with the Middle District of
Florida’s Bankruptcy Judge Williamson
in that, “A chapter 7 debtor has three
options when it comes to secured
property: the debtor can redeem the
secured property, reaffirm the debt
it secures, or surrender the secured
property. Bankruptcy Code § 521. .
.”3 If the “surrender” option is chosen,
no more can be done. However, if
the option “retain” is chosen, three
choices are then given by the software:
(a) reaffirm; (b) redeem; or (c) other.
And, the “other option” then requires
explanation, which may include
“mortgage modification” or even
“defending foreclosure lawsuit.” Such
issues have not been presented to the
courts. Debtor’s counsel should review
and reflect upon this issue thoroughly
before striking “surrender” so as to
avoid a situation like that in Dolan.
Florida Legislature Addressing the
Issue
Indisputably, these
cases
posed a concern for the financial
industry. And, financial institutions hire
lobbyists and influence politicians. In
Florida, the result of such energies
is the proposal to append the Florida
statutes to address this issue.24
The proposed statute creates a
rebuttable
presumption
that
a
bankruptcy debtor waives defenses
if the debtor’s Statement of Intention
asserts an unambiguous surrender
of the property. The statute does not
address what happens if the debtor
harnesses the Statement of Intention
with clarifying language or the debtor
National Association of Consumer Bankruptcy Attorneys
Spring 2016
hits the “retain” box on the form and
chooses the third option of “other”
which may include language about
fighting the foreclosure.
New Isicoff Decision
Judge Isicoff, when reviewing
this issue with a very thorough
statutory analysis, arrived at a different
conclusion.5 She outlined that the
issue requires a preliminary review of
three items: (1) the chapter; (2) the
property affected; and (3) the timing.
First, the Statement of Intention is a
creature only demanded upon a Chapter
7 debtor, and therefore concerns the
trustee of the chapter 7 proceeding.
And, the “surrender” referenced in the
Statement of Intention is a sur