Not every person that files bankruptcy decides to try to hang on to all of their personal property. There are cases where it makes the most sense to turn over collateral to the lender, and wipe the slate clean as far as the debt is concerned. This is referred to as surrendering property back to the lender, and it happens all the time in bankruptcy. If it is your plan to surrender your car, home, boat, or other piece of collateral that secures a loan you must take certain steps to notify the lender and advise the Court of your plan. This is accomplished by notating your intention in the statement of intent that gets filed when your bankruptcy petition is prepared. The problem with giving back property, or noting that your intent is to return collateral is that even though you can state this is your plan, there is no real rule that requires you to follow through with this intention.
If you have intentions to return property in your bankruptcy, it is best to proceed as follows:
- File your case with a statement of intent that is clear about what your plans are relative to every piece of property that secures a loan.
- After noting your intent to surrender, contact the lender and let them know when and where they can pick up a piece of personal property, or when you plan to vacate real estate.
- Advise attorneys for the lender that you are willing to enter into an agreement that lifts the automatic stay, which is a key piece of the process required in order for a lender to accept your surrender of the property. The easier you can make it on the lender to take back the property, the faster they will take steps to secure the collateral.
If you are required to maintain hazard insurance on the collateral and are unable to do so, be sure to let the lender know the property is unprotected. This may cause the lender to act quickly to secure the collateral rather than allow it to remain in your possession. If the lender is simply non-responsive to your attempts to surrender the property, you are well within your rights to file a motion within your bankruptcy court to put the issue before the bankruptcy Judge. For more information, call our office.
For more information about bankruptcy, contact us at www.DsouzaLegalGroup.com. We will help by coming up with solutions that work for you.