questions & answers

Question: I was informed of trustee sale to take place 06/2008 on my home in Florence, AZ. My Husband and I decided it was best to vacate the home with our family before the sale. We filed Chapter 7 Bankruptcy in 2011 and included the home and HOA. We received a letter from an attorney, suing us for HOA dues, post bankruptcy. Wouldn't it already be considered foreclosed from the notified date of sale, even if it was postponed?

Answer: Filing chapter 7 Bankruptcy will discharge HOA fees that accrued up to the date of filing bankruptcy. Any additional fees that accrue after filing for bankruptcy, like other post-bankruptcy debts, will not be discharged. New HOA fees often accrue while the bank forecloses. If the homeowner's association is not paid for the fees from the proceeds of the sale of the property, or does not want to wait to be paid, then the HOA may be able to personally sue for any post-bankruptcy fees during the time the property was titled to the owner. http://www.nolo.com/legal-encyclopedia/can-i-discharge-hoa-dues-chapter-7-bankruptcy.html http://www.law.cornell.edu/uscode/text/11/523 According to Section 523(a)(16) of the Bankruptcy Code, it exempts from discharge any "fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor's interest in a unit that has condominium ownership, in a share of a cooperative corporation, or a lot in a homeowners association." This means that the bankruptcy code does not allow the discharge of post-bankruptcy fees. http://www.law.cornell.edu/uscode/text/11/523 Options for Dealing with Post-Bankruptcy HOA Fees 1. Negotiate a deal with the HOA that provides for waiver of the HOA fees in exchange for agreeing to let it take the property to foreclosure sale. 2. Try to sell the property as a short sale, rather than wait for the mortgage lender to foreclose •Unless the outstanding HOA dues are paid off through the foreclosure sale, the HOA can come after a person to collect any unpaid dues that have accrued after you filed for Chapter 7 bankruptcy (even if the house is already surrendered.)