I had suffered a tremendous financial set back that led me to falling behind on my condo fees and mortgage. I tried to work a repayment schedule with the association but the association filed a lien and is foreclosing on me. I cannot pay the fees in lump sum as I am trying to recover but will be able to catch up within a year. I don't want to lose my home. Can the condo association fees be discharged in a Chap 13 or Chap 7 bankruptcy? Or is there another way to save my home?
The bankruptcy code allows you to discharge COA or HOA fees that accrued BEFORE you filed your bankruptcy--either 7 or 13--but not those which accrue after the bankruptcy is filed.
Keeping your home is another story. A Chapter 7 filing would put a temporary halt to the association foreclosure proceeding, but the association can either get permission from the bankruptcy judge, or simply await the closing of the bankruptcy case and then continue in stater court.
A chapter 13 filing would enable you to save your home, provided that you were caught up in both the mortgage and COA. The maximum time that you can be in a Chapter 13 is 60 months which is 5 years, and so your being able to catch up in a year is an encouraging sign.
You may also be able to have the COA lien stripped from the property--IF the value of the condo is less than what is owed on the mortgage, and that can be done ONLY in a Chapter 13
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You can discharge the pre-petition fees, but doing so won't get rid of the statutory lien that condo associations have by law in most states -- meaning you would still lose the condo. You would have the same right to cure the unpaid pre-petition fees over time in c. 13 that you have to cure the arrears in any secured debt. If you file under c. 13, you would have to keep current on the post-petition fees.
Bear in mind that everyone in your condominium relies on all unit owners paying their condo fees for maintainence of the infrastructure you all share. That is why the law favors condo associations.
In Florida, past due assessments are not discharged in Chapter 7 bankruptcy because the condominiums have a continuing lien on the property. Your only options in Chapter 7 are to reaffirm the debt and bring it current or redeem the property (give it up).
A Chapter 13 bankruptcy will allow you to pay the past due amount over five years, but you have to have steady income to qualify and you still have to pay the monthly assessments as they come due.
Most associations will give you a payment plan of 6 to 12 months rather than foreclosing. You have to pay all of the past due assessments, plus interest, late fees and attorneys fees. The statutes for associations provide for the recovery of attorneys fees by the associations even if litigation is not filed.
This communication is not intended to create an attorney/client relationship. It is always recommended you consult an attorney in person to discuss your case. The Law Offices of Stage & Associates practices state-wide and represents homeowners and community associations. Please visit our website at www.stagelaw.com.
The personal obligation (in personam) can be discharged in a bankruptcy but liens cannot be.
After the case is filed, you are still personally responsible for the ongoing HOA and Condo fees. As long as your name is on the deed, they can charge you.
If you file a Ch 13, you will be responsible to pay the ongoing fees, but the amount you are behind including all of the costs of the foreclosure can be put into the Chapter 13 so you can get caught up. Although a Ch 7 would postpone the foreclosure, you cannot force a creditor into a payments plan in a Ch 7.
If you are in my practice area, call me for a free phone consultation. 407-894-1002. Answering a question on this website does not create an attorney-client relationship. I'm not officially your lawyer until we have had a one on one conversation and you have signed a retainer agreement. I practice bankruptcy in Orlando only. I practice Social Security Disability law throughout the State of Florida. Offices 2110 E. Robinson St. Orlando, FL 32803.