Can HOA Fees Debt Be Eliminated In A Bankruptcy?
Posted: Tuesday, April 26, 2011
by Nancy Shevell
http://www.stonehavenlaw.com
What if you intent to surrender the house? Can you stop paying as soon as you file?
Notes:
- NO, the debtor is still liable to pay their HOA fees under 11 USC 523(a)16.
- Under section 532 (a), makes HOA fees nondischargeable but only if the association fees arose after the date the bankruptcy was filed, and only for so long as the debtor has an ownership interest, or some other equitable interest, in the property
- A post-bankruptcy sale or foreclosure of the debtor’s interest in the property, once fully completed, ends any further accumulation of association fees
- Association fees are a lien upon the real estate- lender must pay the fees in order to complete the sale to a new owner after a foreclosure
The HOA fees would be non-dischargeable for so long as the debtor has an ownership interest or some other equitable interest in the property. Even if a debtor intents to surrender the house or has vacated the house, they are still personally liable for their HOA fees. Only a post-bankruptcy sale or foreclosure would be able to end any further accumulations of HOA fees for they both sever the owner’s interest in the property.
Post bankruptcy association fees will not pose as a problem to the debtor, even though they are deemed to be non-dischargeable. Many times, the non-dischargeable association fees simply evaporate in a foreclosure process. In order to convey ownership of the house to a new buyer, the lender would have to pay off any liens upon the property, one of which is the HOA fees.
The debtor’s would no longer be in debt with the homeowner’s association, but would owe the lender more money, due to the lender having cleared the debt owed to the association. Fortunately, the lender cannot pursue the debtor for the post-bankruptcy association fees because any claims that the lender has against the debtor are based upon pre-bankruptcy agreements, which would be discharged in a bankruptcy case. The bottom line is, the debtor would never have to pay the post-bankruptcy HOA fees, even though they are deemed to be non-dischargeable.
Bankruptcy attorney Chino Hills can offer you best legal services to satisfy your needs. To clear the doubts regarding your bankruptcy filing, you can make a free consultation with our bankruptcy lawyer Chino Hills.
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