Homestead Not Abandoned By Surrender To Lender In Bankruptcy

Your Florida homestead property is exempt as long as you intend to maintain the property as your permanent residence. When a homestead owner files Chapter 7 bankruptcy he must declare his future intention regarding his homestead property and mortgage.

The debtor must declare if he intends to reaffirm the mortgage and stay in the house or surrender the property to the mortgage lender and discharge personal liability on th mortgage note. If a debtor states on his bankruptcy petition that he intends to surrender his homestead, does that signify that he intends to abandon the property and preclude him from the homestead exemption?

In a recently decided bankruptcy case a debtor’s statement of intentions indicated he wanted to surrender his homestead to the mortgage company. However, the debtor also intended to live in his house until the mortgage lender completed the foreclosure. The trustee objected to the debtor’s plan to continued occupancy during the bankruptcy, and the trustee argued that when the debtor’s stated intention to surrender the property amounted to an abandonment of his homestead protection.

 The court disagreed with the trustee. The court held that given Florida’s liberal interpretation of homestead protection the debtor’s intention to surrender the house to foreclosure does not constitute an abandonment of his homestead protection. Abandonment of homestead requires that the homeowner voluntarily out of his house into a new residence and show the intention not to return to the homestead property. Case No. 8:11-03796

Page last updated on May 22, 2020

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