Can I Discharge HOA Dues in Bankruptcy?
If you are thinking about filing for consumer bankruptcy and are currently a homeowner, you may also be someone who pays fees to a homeowners association. When it comes to homeowners association (HOA) fees, it is important to understand how this type of debt gets handled in a bankruptcy case. It will be essential to understand the distinctions between Chapter 7 bankruptcy and Chapter 13 bankruptcy for the purposes of HOA fees. To be clear, there are particular considerations for HOA fees that are different from other types of debt. We will explain more below.
Understanding HOA Dues and HOA Debt
As an article in The Balance explains, HOA fees consist of money that is paid to the homeowners association when you own a home in a particular neighborhood or building. In effect, HOA fees are better thought of as “dues” that “help you share costs with others in your community.” The homeowners association typically is “a group of homeowners in the same neighborhood or building who share costs, set rules, and manage common areas together.” Most HOA fees are due monthly and go toward costs of the HOA. Nearly all homeowners of a condominium will owe HOA dues, and homeowners in other communities may also owe HOA dues.
How would you have accrued past-due HOA fees? Since these are typically paid every month, most homeowners make the payment around the same time they make a monthly mortgage payment. If a homeowner is behind on mortgage payments (and behind on other bills), it is often the case that the homeowner has not been paying HOA fees. Accordingly, a homeowner who is considering bankruptcy may owe thousands of dollars in HOA fees.
As with other creditors, homeowners associations can send unpaid HOA dues to collection agencies. However, an HOA can also place a lien on your property. In some situations, failure to pay HOA dues can result in foreclosure.
Consumer Bankruptcy and HOA Fees
For anyone who is planning to file for Chapter 7 bankruptcy, you need to know that you may still owe HOA fees in certain circumstances. In other words, not all HOA fees may be dischargeable. Generally speaking, past-due HOA fees can be discharged in a Chapter 7 bankruptcy case. However, they will only be dischargeable up to the date that you file your petition for bankruptcy. Any HOA fees that accrue after that date likely will not be dischargeable in your bankruptcy case. This is true even if you surrender your condo or house as part of your Chapter 7 bankruptcy case since HOA fees continue to accrue even if you surrender the property.
How can you get around this in a Chapter 7 bankruptcy case? If you do not plan to keep your home, you can wait to file for bankruptcy until the bank forecloses. Or, alternately, you can attempt to sell the property through a short sale.
Chapter 13 cases where you plan to keep your home are a bit different. If you are using Chapter 13 bankruptcy to avoid foreclosure, you will typically be able to include past-due HOA fees in your repayment plan. However, you will need to continue making regular HOA fee payments once you file for bankruptcy. Otherwise, any HOA fees that accrue after the date you file for bankruptcy can result in a lien and may not be dischargeable.
Contact an Oak Park Bankruptcy Lawyer
Do you have questions about discharging HOA fees in a consumer bankruptcy case? An Oak Park consumer bankruptcy attorney can help. Contact the Emerson Law Firm to learn more.
See Related Blog Posts:
Mortgage Tax Debt and Bankruptcy
What Are the Functions of a Bankruptcy Trustee?
Understanding HOA Dues and HOA Debt
As an article in The Balance explains, HOA fees consist of money that is paid to the homeowners association when you own a home in a particular neighborhood or building. In effect, HOA fees are better thought of as “dues” that “help you share costs with others in your community.” The homeowners association typically is “a group of homeowners in the same neighborhood or building who share costs, set rules, and manage common areas together.” Most HOA fees are due monthly and go toward costs of the HOA. Nearly all homeowners of a condominium will owe HOA dues, and homeowners in other communities may also owe HOA dues.
How would you have accrued past-due HOA fees? Since these are typically paid every month, most homeowners make the payment around the same time they make a monthly mortgage payment. If a homeowner is behind on mortgage payments (and behind on other bills), it is often the case that the homeowner has not been paying HOA fees. Accordingly, a homeowner who is considering bankruptcy may owe thousands of dollars in HOA fees.
As with other creditors, homeowners associations can send unpaid HOA dues to collection agencies. However, an HOA can also place a lien on your property. In some situations, failure to pay HOA dues can result in foreclosure.
Consumer Bankruptcy and HOA Fees
For anyone who is planning to file for Chapter 7 bankruptcy, you need to know that you may still owe HOA fees in certain circumstances. In other words, not all HOA fees may be dischargeable. Generally speaking, past-due HOA fees can be discharged in a Chapter 7 bankruptcy case. However, they will only be dischargeable up to the date that you file your petition for bankruptcy. Any HOA fees that accrue after that date likely will not be dischargeable in your bankruptcy case. This is true even if you surrender your condo or house as part of your Chapter 7 bankruptcy case since HOA fees continue to accrue even if you surrender the property.
How can you get around this in a Chapter 7 bankruptcy case? If you do not plan to keep your home, you can wait to file for bankruptcy until the bank forecloses. Or, alternately, you can attempt to sell the property through a short sale.
Chapter 13 cases where you plan to keep your home are a bit different. If you are using Chapter 13 bankruptcy to avoid foreclosure, you will typically be able to include past-due HOA fees in your repayment plan. However, you will need to continue making regular HOA fee payments once you file for bankruptcy. Otherwise, any HOA fees that accrue after the date you file for bankruptcy can result in a lien and may not be dischargeable.
Contact an Oak Park Bankruptcy Lawyer
Do you have questions about discharging HOA fees in a consumer bankruptcy case? An Oak Park consumer bankruptcy attorney can help. Contact the Emerson Law Firm to learn more.
See Related Blog Posts:
Mortgage Tax Debt and Bankruptcy
What Are the Functions of a Bankruptcy Trustee?
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