My parents bought the property but have failed to keep up with the HOA fees which are $5,000 as of now.
The HOA refused to make a payment arrangement/settlement with us.
Can my parents file chap. 7 for these fees, without affecting their residence/vehicles?
The rules regarding whether one is entitled to file a Chapter 7 BR can be rather complex. There is no way to tell if they would qualify with the information provided. They should consult with a local BR attorney.
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3 lawyers agree
Personal Injury Lawyer
Probably not. In most states, timeshares are not exempt property (can't usually keep it) and the HOA is probably able to attach the timeshare directly.
Chapter 13 would provide a way for them to pay it in a payment plan and possibly keep all of their property and the timeshare.
Clark County, Nevada practitioner.
They could, but an attorney should review their situation to make sure they will not lose something of value. Also, once they do file, all future HOA fees would be their obligation until the timeshare was properly out of their names. Which could be years. The attorney will advise them on how to proceed.
2 lawyers agree
Yes, if they otherwise qualify, your parents can file Chapter 7 and discharge the past-due HOA fees, but only if they are surrendering their interest in the timeshare. Even if they do surrender the timeshare, as other answers have pointed out, they would remain liable for post-petition HOA fees that accrue up until the time the property is no longer in their name. Whether the filing of a BK for a $5,000 debt is a good idea or not, and the extent to which it would affect their residence and vehicles (and any other assets) depends on many factors, including the value of those assets, the amount of equity in their residence, etc. If they have other significant debt that they could benefit from discharging in a BK, then filing might make sense. But if this is the only debt they are concerned with, I would think filing a BK may be a little extreme. They should arrange a consultation with a local bankruptcy attorney (many will offer a free intitial consultation) to have their entire financial situation reviewed, including the amount of debt and the value of all their assets, so that more precise advice can be given as to whether a bankruptcy filing is in their best interests or not.