New Florida Law Streamlines Foreclosures When Bankrupt Borrowers Surrender Their Home

In Florida, as of October 1, 2018, the lender can use your bankruptcy admissions against you if you try to fight a foreclosure.

In recent years, some Florida homeowners have agreed to surrender their homes in bankruptcy in order get a discharge of the mortgage debt, and then later fight the lender's foreclosure in court to try to buy some time to live in the home for free. Senate Bill 220, which Florida Governor Rick Scott signed into law on March 19, 2018, is designed to prevent people from having it both ways. The new law prevents a homeowner from contesting a foreclosure after agreeing in a bankruptcy to surrender the property to the lender. (To learn more about this law, see Certain Bankruptcy Debtors in Florida Can't Fight a Foreclosure.)

Homeowners who take this tactic before the effective date of the new law, which is October 1, 2018, will likely face a roadblock as well. In the case of Failla v. Citibank,N.A. (In re Failla), No. 15-15626, 2016 WL 5750666 (11th Cir. 2016), the 11th Circuit Court of Appeals upheld a bankruptcy court decision in which the bankruptcy court ordered the debtors not to contest the lender’s foreclosure in state court after surrendering the home in their bankruptcy.

Effective date: October 1, 2018.