H is for Home Owner's Association Dues

What happens to my homeowner’s association (HOA) dues if I file for bankruptcy?

It depends. If you owe HOA dues from before you filed, they are discharged in the bankruptcy. If you don’t pay the HOA after you file, those dues will not be discharged.

Where it gets confusing for people is when the property is foreclosed. A foreclosure may take many months to complete. Until that foreclosure is completed and title is transferred the dues continue to accrue and all the dues that accumulated after the date of filing the bankruptcy petition remain due and payable by the debtor under the U.S. Bankruptcy Code.

If you are living in the condo until the foreclosure process is completed, you could pay the HOA dues each month and avoid the problem entirely.

If you have surrendered the property in the bankruptcy proceeding, you likely aren’t paying the HOA dues because you have to pay rent somewhere to live.

If you haven’t paid the dues during the bankruptcy will it be a problem for you?

It may not be. This situation often resolves itself in the debtor’s favor because the lender has to clear the title before selling the property. Once the lender pays the dues to clear the title the debt no longer exists. Since the debt claim is based on pre-bankruptcy agreements, which have been discharged, the lender may conclude it has no recourse against the debtor. This means they may not come after you for the HOA dues even though technically you may still owe a portion of them.

For more Bankruptcy H’s see:

Image credit: Leo Reynolds

 

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