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Chapter 7 bankruptcy discharged. staying in home. now HOA is trying to lien sale home. I need to know if I am required to pay

Riverside, CA |

I am confused over what if any part of the HOA fees I am no longer on the hook for. I am living at the home and current on the mortgage. They want to hit me for all sorts of back fees, atty fees, interest, etc. and are basically saying that I am responsible for all of it. Is that true? I know I am responsible for Post-petition hoa fees, etc.
I am trying to get on a payment plan with them but the collection law firm is very difficult and doesn't call me back. Please advise

Thanks for the help. I'm a little confused based on other things I've read. Are you saying that an HOA lien on my home can be "Avoided" in the same way a judgment lien can be avoided in a chapter 7? If so, is that to say that they couldn't make me pay even if I continued to live there?

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Attorney answers 3

Posted

You're n the hook for post-petition charges, at least. If the HOA has a statutory lien in place prior to your chapter 7 filing, then quite possible that all pre bankruptcy /repetition charges fees costs will be captured by that lien and attached to your home/condo...likely still in place even after chapter 7 discharge received (unless additional work was completed DURING your chapter 7 case to avoid the HOA lien, if one existed).

Now: Depending on whether you have any equity in the condo and whether you can afford payments on at least 1st mortgage (employed or other sources of income??), then a chapter 13 filed now may be able to provide you with additional solutions.

NOTE: This answer is made available by the lawyer for educational purposes only. By using or participating in this site you understand that there is no attorney client privilege between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed professional attorney with whom you have established an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question.

Michael Salanick

Michael Salanick

Posted

*pre-petition /strike "repetition" typo

Shaye Larkin

Shaye Larkin

Posted

Great response by my colleague!

Asker

Posted

Thanks for the help. I'm a little confused based on other things I've read. Are you saying that an HOA lien on my home can be "Avoided" in the same way a judgment lien can be avoided in a chapter 7? If so, is that to say that they couldn't make me pay even if I continued to live there?

Posted

HOA dues and assessments receive special treatment in bankruptcy. First, any assessments which came due after the day you filed for bankruptcy are clearly not discharged by your bankruptcy. Therefore, your understanding as to Post-Petition HOA dues and assessments is correct --- you are going to need to pay those.

The issue with Pre-Petition assessments is a bit more difficult. The bankruptcy does discharge your personal liablity on the duess and assessments which were incurred prior to the bankruptcy, or Pre-Petition. However, a bankruptcy does not discharge the lien which normally is associated with HOA dues. In other words, the Association may not be able to require you to pay the Pre-petition asessment, but they are entitled to enforce their lien agains the property. Therefore, just like any other secured creditor, if the debt is not paid, they may be entitled to recovery against the property.

It would be advisable to speak to an attorney both familiar with bankruptcy as well as with HOA issues in your local area.

Shaye Larkin

Shaye Larkin

Posted

Great response by my colleague

Asker

Posted

Thanks for the help. I'm a little confused based on other things I've read. Are you saying that an HOA lien on my home can be "Avoided" in the same way a judgment lien can be avoided in a chapter 7? If so, is that to say that they couldn't make me pay even if I continued to live there?

Marc W Gunn

Marc W Gunn

Posted

It is important to remember that we are talking about pre-petition dues and assessments, not post petition dues and assessments. The Association always maintains the right to collect post-petition dues and assessments. Unfortunately an HOA lien cannot be "avoided" in a Chapter 7 proceeding. Avoidance of a lien pursuant to 11 USC §522(f) applies only to (a) a judicial lien (i.e. judgment lien) or (b) to non possessory, non purchase money security interest in certain household furnishings. To be a bit more clear, a bankruptcy discharge relieves "the debtor" from all debts that arose before the date the case was filed (with certain exceptions -- not applicable to this discussion). The discharge does not relieve "the property" from the debt. In other words, if the Homeowners Association is entitled to a lien against the property (which is generally the case), then "the property" will always remain liable for the debt. If "the debtor" does not elect to pay the debt (voluntarily) then the creditor (homeowners association) may elect to collect the debt out of "the property". This is done by foreclosure. Whether the association has the right to collect the debt by foreclosure is a matter of State law and is governed by the provisions of the CC&Rs. There may also be various defenses to the foreclosure, unrelated to bankruptcy. This collection remedy is similar to the situation where you have a mortgage on your home, but you choose not to continue paying the mortgage after bankruptcy. Though the mortgage company cannot compel you to pay the mortgage, the mortgage company can foreclose and sell the property. In many cases, so as to prevent the loss of the home, debtors often agree to "voluntarily" continue with mortgage payments so as to keep the residence and prevent foreclosure. As indicated by another attorney, a Chapter 13 bankruptcy "may" allow the removal of the HOA lien, but only if there is no equity in the property beyond prior liens. Removal of a "junior lien" is possible in Chapter 13 by virtue of the provisions of 11 USC §506(d). That however, is an entirely different topic. Because each case is an individual situation you should speak to an attorney familiar with both bankruptcy and homeowner association matters to get advice for your particular case. Unfortunately, general legal advice can only get one so far in resolving personal situations. You need to find an attorney licensed to practice in your local area, who is familiar with such matters.

Michael Salanick

Michael Salanick

Posted

Mr. Gunn: Exactly correct response - nicely done.

Posted

I agree with the other attorneys. If there was a statutory lien in place when your bankruptcy was filed, that lien would likely include all the fees you mentioned. If it is a large amount, you might consider filing a Chapter 13 to strip the lien and just pay what you can afford.

The information provided herein is general information only and not legal advice. The information provided herein does not create an attorney client relationship and is not a substitute for having a consultation with an attorney. It is important to have a consultation with an attorney as the information provided in this forum is limited and cannot possibly cover all potential issues in a given situation.

Asker

Posted

Thanks for the help. I'm a little confused based on other things I've read. Are you saying that an HOA lien on my home can be "Avoided" in the same way a judgment lien can be avoided in a chapter 7? If so, is that to say that they couldn't make me pay even if I continued to live there?

Shaye Larkin

Shaye Larkin

Posted

No. If it is statutory it cannot be voided in a Chapter 7, it can only be stripped in a Chapter 13, and only if it is entirely underwater, meaning there is no equity attaching to it.

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