When filing bankruptcy, “surrender” means “surrender.”
That is the message from Tampa bankruptcy judge Michael G. Williamson in a recent Florida bankruptcy case, in which Lisa Metzler of Gibsonton declared bankruptcy in 2012. She was delinquent on her mortgage and had no way to pay it or her other debts. She agreed to surrender her home to the lender, Wells Fargo, and allow them to proceed with foreclosure.
Metzler’s incentive to surrender the home came from one of the finer points of bankruptcy law. Debtors filing bankruptcy are entitled to certain “exemptions” — property not subject to liquidation to satisfy creditors’ claims. Normally, this includes $1,000 worth of personal property, such as furniture and jewelry. However, in cases where a home is surrendered, that exemption is increased to $5,000.
Apparently, however, Metzler had no intention of actually surrendering her home. After agreeing to do so in federal bankruptcy court, she hired an attorney to fight the foreclosure in state court. In response, Wells Fargo filed a motion asking Judge Williamson to revoke confirmation of Metzler’s bankruptcy plan. Williamson granted the motion and dismissed the case.
Since then, at least two other bankruptcy judges in Florida (which continues to lead the nation in foreclosures) have built on Williamson’s ruling in similar cases. And last month, Williamson reopened the Metzler case in order to issue an opinion and further clarify the matter.
“At a minimum,” Williamson wrote, “’surrender’ means a debtor cannot take an overt act that impedes a secured creditor from foreclosing its interest in secured property.”
In case it was not already clear, now it most certainly is: In bankruptcy filings, as in all legal matters, you must do what you say you will do.