I was unemplyed for a year and owe my HOA collection ageny $10,000. They were going to foreclose my property, but now I have another job. The HOA collection agency wants me to sign a contract to repay the past due with a very high interest rate and make my regular monthly HOA payments on top of that. I am thinking of bankrupting my credit card debt. QUESTION... If I sign a repayment contract with the HOA Collectors, would I be able to breach the contract LATER and just bankrupt the past due? If I sign the contract they will stop the forecloseure. I know that a BK will also stop a foreclosure.
Filing a Chapter 7 bankruptcy would eliminate your personal liability on the past due HOA but it cannot remove the lien. Thus, in many instances it does little good for people who want to keep their properties because the HOA retains its rights under state law to foreclose even though it cannot sue you personally post-bankruptcy discharge.
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Hamid's answer is not only correct but covers the topic very well. I would only add that if you are considering bankruptcy and retaining your real estate you might want to discuss with your bankruptcy attorney whether Chapter 13 provides you any advantages. One advantage may be reducing the interest rate on the repayment of past HOA fees. However, that advantage alone may not warrant you filing a Chapter 13 given the statistically low percentage of people that complete them. Discuss it with your bankruptcy attorney before you make a decision.
This answer in no way creates an attorney-client relationship. The answer is not a complete answer and requires additional facts in order to provide the best options. The submitter accepts the risk of relying on such an incomplete answer and waives any claims of damages for doing so. As stated in the answer the submitter should contact a qualified bankruptcy attorney is discuss these issues further before any action is taken. Any action taken without advise and counsel of a qualified attorney is inadvisable.
Chapter 7 Bankruptcy Attorney
You can file BK to discharge HOA dues prior to filing, but not HOA dues incurred after filing.
Typically, HOA dues are secured by the property. Thus, BK removes the debt as to you personally, but not as to the property.
It could be possible to strip of the lien in Chapter 13, but more info. is needed to address that issue.
Contact a good BK attorney in your area.