I surrendered my property in my Bankruptcy, Now What?

May 26, 2014

When you file for bankruptcy, you have the option of surrendering your secured property which you no longer wish to keep.  For instance, if you have a rental house which you can no longer afford, you can surrender it through your bankruptcy and discharge your personal liability for the remaining debt.  However, surrendering the property does not automatically mean that it is no longer yours.  When you elect to surrender something through bankruptcy, you basically give up your interest.  It also allows the secured creditor to retake possession of the property without seeking permission of the court.

In the above example, it is important to remember that even though you may have surrendered your interest in the house, the mortgage company would still need to go through the formal foreclosure process in order to take proper ownership of the property.  The foreclosure would have to take place even if your case has been discharged and closed.  While pre-petition debt associated with the property, meaning debt from before the bankruptcy was filed, is likely to be discharged, you are still liable for any post-petition debt.  If you were required to pay Home Owner Association fees, they will continue to accumulate after the bankruptcy even if the property was surrendered.  Furthermore, you will be liable for all the post-petition HOA fees, property taxes and other related debts until the bank formally forecloses on the property.

Contact a bankruptcy attorney for more questions on the consequences of surrendering your property through your case.

If you are considering filing for bankruptcy please contact the experienced attorneys at Fears | Nachawati for a free consultation. Call us at 1-866-705-7584 or send an email to fears@fnlawfirm.com .

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