Reaffirming vs. “Retain and Continue to Pay”

Remember the Donnell case from New Hampshire (previous post)?  Heree it is–  In re Donnell (cannot compel surrender under 521)  Judge Deasy said that relief from stay is the appropriate remedy over a motion to compel the debtor to surrender the property as stated on his Statement of Intention since the court had no authority to make such an order.

This is an interesting MA Appeals Court case (not published in NE Reporter) that piggybacks off of that scenario where a debtor has stated his intention to surrender but fails to do so.  See, In EverBank v. Chacon, 92 Mass.App.Ct. 1101 (2017), the former mortgagee sought to evict the former owner, who had recently been a debtor in a Chapter 7 case (converted from 13) in connection to which he stated his intention to surrender the property.  See link below.

The former owner counterclaimed in the Summary Process case and challenged the validity of the foreclosure.  The lender argued that (1) res judicata applied because of the prior motion for relief (wrong because of the expedited summary nature of relief proceedings per Grella) and (2) that the debtor’s stated intention to surrender was a waiver that estopped him from later challenging the foreclosure.

The Appeals Court wrote a very nice summary of the mechanics of 521 and related Code sections and reasoned (correctly) that in a statement of intention, a debtor does not state to whom the property is to be surrendered, rather 521 states that property is surrendered not to the secured party but to the trustee, who then abandons the property if appropriate to the debtor.  The debtor’s statement that he was surrendering the property was not tantamount to a statement that he was surrendering it to the creditor and thereby possibly waiving any rights to contest the creditor’s foreclosure, rather it was merely a requirement under 521 and the Court declined to treat it as anything other than that.

EverBank v Chacon.doc (reaffirmation)