In Texas, when a residential subdivision is created, the subdivision developer typically records in the county records "Declarations" creating a homeowner's association.
The Declarations also typically provide that HOA dues are owed by each homeowner that will occupy the property, and constitute a lien upon the land. You should have a copy of the Declarations for your subdivision. If you don't have one, you can obtain one from the HOA, or from the county clerk of your county.
Sometimes the Declarations are your friend: they can limit how much HOA's can charge in attorney fees, limit when attorney fees can be charged, and limit other costs that can be charged. HOA's cannot charge fees that are not authorized by the Declarations; it's like a contract between you and the HOA, and you agree to it when you buy a house in that subdivision.
To answer your question, HOA fees are dischargeable in bankruptcy, but the HOA will still have a lien on the property, and be able to foreclose on your property after the bankruptcy to the extent they are unpaid.
You would typically provide to pay the delinquent HOA dues, interest, etc. through a chapter 13 or 11 plan. Chapter 13 may be your best remedy. An attorney would have to have more information from you to know for sure. In chapter 7 cases, if possible I help my clients try to make a deal to catch up HOA dues over a period of time.
For some of my chapter 13 clients, if they have a mortgage or mortgages on their property that total more than the value of the property, we can "strip off" or treat as an unsecured claim, the HOA dues because the HOA Declarations usually provide that the HOA lien is "subordinated" or made to be less of a priority, than mortgages.
Also, under a section of the Bankruptcy Code, 11 USC Section 523(a)(16), HOA fees are not discharged if they become due and payable after the bankruptcy is filed, and so long as you or the bankruptcy trustee has a "legal, equitable or possessory ownership interest" of the property.
Also, important changes were made recently to protect consumers from HOA's in Section 209 of the Texas Property Code. You should consult an attorney experienced in consumer, real estate or consumer bankruptcy law to discuss your rights and options.
We are a debt relief agency and we help people file for relief under the bankruptcy laws.
Whether you can discharge your HOA dues in bankruptcy & retain the property will depend on whether the HOA dues are liens or not. In some states, HOA dues are automatically secured liens on the property, in other states, HOA dues become liens when recorded with the county. In Texas, the laws can be very different, so you will need to consult a local attorney. If you have received legal documents from your HOA, these should clue you in.
Since you are NOT familiar with the various forms of bankruptcy, you need experienced representation in planning whether bankruptcy will help you solve this problem or not.
You have not mentioned other debts. If you own real estate free and clear (no loan) unless you have other serious financial problems bankruptcy may not be appropriate. Generally bankruptcy can discharge pre-bankruptcy HOA dues if there is not a lien. Lien status depends on state law so you need to talk to a local lawyer.
Law Office of Michael J. Primus
We are a debt relief agency and help people file for bankruptcy under the... more
Law Office of Michael J. Primus
We are a debt relief agency and help people file for bankruptcy under the bankruptcy laws