If you are considering filing for bankruptcy while owing past due HOA (homeowner association) fees, it’s vital that you know how this financial obligation affects the bankruptcy process. If you are behind on your HOA dues, a homeowner’s association lien can be placed on your home, and the HOA has the right to sue you to recover past due fees.
Filing for bankruptcy may allow the home to be preserved and control the HOA fees. This typically means that you will have to catch up on your missed HOA payments if you want to keep your home; however, this is largely contingent on whether or not you plan to keep your home, and whether you are filing chapter 7, or chapter 13 bankruptcy.
Understanding A Homeowners Association Lien
Most neighborhoods or developments that are managed by an HOA require you to abide by covenants or community rules, conditions, and restrictions (CC&Rs). These CC&Rs give HOAs the power to collect monthly dues to maintain the community and its amenities.
If you get behind on your dues, a Homeowners Association Lien can be placed on your property. While many factors dictate whether an HOA will decide to foreclose on your home, it’s beneficial to know your options while beginning the bankruptcy process.
Homeowners Association Liens and Chapter 13
The repayment plans that are a part of chapter 13 bankruptcies can help you to catch up on your HOA fees and keep your home. If you make timely monthly payments, the bankruptcy’s automatic stay will prohibit your HOA from foreclosing on your home.
However, it’s essential also to consider that you’ll have to make ongoing payments of your post-bankruptcy HOA fees to prevent the HOA from asking the courts to lift the automatic stay so that they can initiate foreclosure.
Homeowners Association Liens and Chapter 7
In most cases, filing for Chapter 7 bankruptcy will not eliminate the HOA’s lien from your property. Your debt discharge would only remove personal liability for any outstanding pre-bankruptcy HOA dues. As a result, the HOA could still foreclose on your home even after you receive a Chapter 7 discharge.
Parker & DuFresne
The decision to file for bankruptcy is a difficult and lengthy one that should not be done without the legal guidance of an attorney that you trust. At Parker & DuFresne our goal is to get clients across Northeast Florida back on the road to financial stability. We specialize in bankruptcy law, and through a thorough consultation, we’ll help you determine if bankruptcy is the right solution for you. Contact us today to learn more!