IN RE: ABRAHAM A. ELKOUBY, Chapter 7: ORDER DENYING MOTION TO COMPEL DEBTOR TO SURRENDER PROPERTY
A chapter 7 debtor who indicates surrender of real property in his statement of intention is not obligated to surrender that property to the lienholder, whether or not the property is administered by the chapter 7 trustee. Compulsory surrender of real property collateral by a debtor to a lienholder in chapter 7 is not supported by, and indeed ignores, the express provisions of the Bankruptcy Code. And, consequently, I must disagree with my colleagues who have held otherwise.
In this case the Debtor performed his stated intention to surrender with respect to the Property because he did not interfere with the Chapter 7 Trustee’s administration of the Property. Theia took no action in the bankruptcy case other than to seek stay relief, which it obtained. Because the Debtor’s surrender in this case was to the Chapter 7 Trustee and not to Theia, I do not need to determine whether and to what extent surrender to a lienholder, as required by chapter 12 or 13, requires a debtor to relinquish defenses to foreclosure. Consequently, there is no purpose in reopening the bankruptcy case, and Theia’s Motion to Compel is denied. The Debtor’s Motion to Stay is also denied.
Full opinion here…