July 11, 2018 By:
When you’ve decided to get a fresh financial start with a bankruptcy filing, and part of your overall debt is in the form of past-due condominium dues or assessments, you need to be very careful—while a Chapter 7 petition may extinguish your liability on the debt, the HOA or condo association may still hold a lien on your property.
If you seek to liquidate or permanently discharge debts under Chapter 7, any homeowner association or condo dues that you owe at the time of filing can be wiped out—you won’t have to pay them. Unfortunately, the discharge only affects your obligation to pay the past due amounts. If there’s a lien on your property, the lienholder retains the right to enforce that lien—to foreclose on the property, if necessary, to collect the amount due. If the house goes to a foreclosure sale, or is sold to a new buyer, the lienholder has the right to collect the amount due at the time of closing or out of the proceeds of the foreclosure sale.
Furthermore, any fees, assessments or dues that accrue after the bankruptcy filing will not be discharged. The HOA or condo association may choose to place a lien on the property, hoping to collect out of the proceeds of a foreclosure or other sale. Conversely, the lienholder may choose to enforce the lien against you.
If you decide not to stay in the house, the HOA or condo association will have little recourse. However, if you do stay in the home, you will want to make arrangements to pay any past due assessments, fees or dues, as the lien that attaches to them will remain in force.
I offer a free initial consultation to all potential bankruptcy clients. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.