A Miami bankruptcy judge threw another wrench into the already convoluted and controversial “surrender” issue linking bankruptcy and foreclosure cases.
In a ruling that contradicted others by Chief Judge Paul Hyman Jr. in the Southern District of Florida and Judge Michael Williamson in the Middle District, U.S. Bankruptcy Judge A. Jay Cristol said it “would be unconstitutional, inequitable and unjust” to force homeowners to stop fighting foreclosure after they surrender property in bankruptcy court.
Some judges, like Hyman and Williamson, have been clamping down, threatening penalties and other sanctions against homeowners who surrender their property to get bankruptcy protection but keep fighting in state court to save the same homes from foreclosure. Their rulings created legal precedents that divided bankruptcy judges by finding that “surrender” means relinquishing property to “make it available to the secured creditor by refraining from taking any overt act that impedes” foreclosure.
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