Now that the state legislature has been back in session for several weeks, it isn’t too much of a surprise to see more legislation being introduced in Tallahassee. What is perhaps surprising to see, however, is that one of these recently proposed measures deals directly with bankruptcy and foreclosure, two issues that have recently taken on less significance in post-recession Florida.
The legislation in question is House Bill 471, which calls for a new section to be added to Florida’s foreclosure statute — entitled “Actions in Foreclosure” — that would effectively close the so-called “wildcard exemption” loophole in post-bankruptcy foreclosure cases.
According to HB 471’s sponsor, Rep. Jay Fant (R-Jacksonville), those who file for bankruptcy in federal court are given the ability to protect additional assets provided they agree to surrender their rights under the homestead exemption. Specifically, by making this decision, they can expand the protection of the wildcard exemption from $1,000 to $4,000.
Fant indicates that problems arise, however, if the person fights any foreclosure efforts in the state court system post-bankruptcy, meaning they continue to hang onto the home during the pendency of these proceedings despite previously agreeing to part ways with it.
HB 471 would effectively end this practice by allowing the lienholder (i.e., the party looking to foreclose) to submit any document from the homeowner’s bankruptcy case that indicates an intention to surrender the property.
Provided this document is not withdrawn, the lienholder could submit it together with the bankruptcy discharge to the court, thereby creating a rebuttable presumption that the homeowner has indeed surrendered their interest in the property and waived foreclosure defenses.
While it remains to be seen if the bill will gain any legislative traction, some legal experts are already predicting problems given that the manner in which HB 471 is written is not necessarily reflective of recent court decisions.
Stay tuned for updates …
If you would like to learn more about how bankruptcy can help stop foreclosure, consider speaking with a skilled legal professional who can provide answers and pursue solutions.