Lexology-

Last year, Burr & Forman lawyers won a decisive victory in the Eleventh Circuit, in the case of In re Failla, 838 F.3d 1170 (11th Cir. 2016). In Failla, the Eleventh Circuit held that a debtor who files a statement of intention to “surrender” his or her house in bankruptcy may not oppose the secured creditor’s foreclosure proceeding in state court. Failla is a significant victory for secured creditors for two primary reasons. First, the Eleventh Circuit interpreted the meaning of “surrender,” as used in 11 U.S.C. § 521(a)(2), and concluded that a debtor who says he will “surrender” collateral must relinquish his rights in the property, including the right to possess and use it and the right to defend a foreclosure proceeding. Second, while secured creditors can ask state court judges to enforce a debtor’s statement of intention to surrender through the doctrine of judicial estoppel, the Failla opinion confirms that secured creditors may also seek to reopen bankruptcy cases to compel a debtor to surrender based, in part, on the bankruptcy court’s statutory authority to remedy abuses of the bankruptcy system. A more detailed discussion of the court’s legal analysis in Failla is available at burr.com by clicking here.

About a month after the Failla opinion was issued, Burr & Forman lawyers were again on the prevailing side of an Eleventh Circuit decision, in Jones v. CitiMortgage, Inc., 666 F. App’x 766 (11th Cir. 2016). In Jones, the debtor filed a statement of intention to reaffirm the secured debt on his home during bankruptcy, but a reaffirmation agreement was never actually filed.

[LEXOLOGY]

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