It is a bit unclear from the facts you present with regard to the status of the HOA dues. If the case was pending trial there likely was lien filed or perhaps the HOA sued only for a money judgment and not foreclosure. In any event, HOAs are becoming increasingly more aggressive in moving foreclosure cases along. Because an HOA will get paid some of the outstanding dues when the property is sold at a foreclosure sale, an HOA has incentive to Move for Relief from Stay (meaning asking the court to have the bankruptcy protection as to your home lifted) and move along either the mortgage foreclosure case, or the pending case brought against you by the HOA so that the HOA can get paid from the sale of the property. Your bankruptcy case will limit the HOA’s ability to collect from you personally, but the HOA will get paid from proceeds of a sale of the property.
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The HOA probably recorded a lien before it filed its lawsuit. I would be surprised if the HOA did not file a lien since most HOA litigation over assessments revolves around foreclosing on the HOA lien.
Chapter 7 bankruptcy does not usually strip liens from a property. If you filed a Chapter 7 bankruptcy and indicated in your Statement of Intentions that you are going to surrender the property, the HOA will lift the bankruptcy stay and continue to foreclose on its lien.
If the HOA does not have a lien you can object to the bankruptcy stay being lifted and prevent the HOA from being able to continue the foreclosure action until the bankruptcy is over. Then you could argue to the Circuit Court that the case should be dismissed because the bankruptcy discharged the HOA debt and there is no lien for the HOA to obtain a foreclosure.
I recommend that you bring the issue up to your bankruptcy attorney if you hired one to file your bankruptcy. If not, you should talk to a local bankruptcy attorney as soon as possible. The relationship between bankruptcy law and HOA law becomes very complex especially when the HOA obtains a lien and the bankruptcy discharges the debt but not the lien.
The attorney for the HOA and the HOA do not care whether you get a discharge of your debts, they just want to enforce their claims against the property granted by the documents creating the HOA you had to sign and agree to (even if you did not realize it) at your loan closing. If they wait until the mortgage company forecloses, they may not get paid. Also they probably do not have a basis for filing a Motion to Dismiss your case or even to object to your being able to discharge your personal liablility for the HOA dues, but they can seek relief from the stay to seek to impose a lien then foreclose on that lien, which is what they are likely going to do. If you have an attorney, talk to him/her.
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A dismissal would not really be proper in this case because they will probably need to pick up where they left off with the lawsuit once your bankruptcy is over and the stay lifts with regard to the property. Although your bankruptcy will resolve the debt owed to the owner's association, the association can still foreclose on the property and will not want to start over by having to refile a new case. Also, you will want to keep in mind that any dues that are assessed after the date of your bankruptcy filing will still be your responsibility, at least until someone else takes possession of the property.
I agree with the other comments. Also, you did not indicate you have an attorney. If you filed your case without a lawyer the HOA may be just "sitting tight" to see whether your case filing will be completed successfully. Many cases filed without attorneys do not reach discharge and the HOA would not want to have to begin all over if that is the case with your bankruptcy filing.
Please keep in mind that all your HOA fees that come due after your case was filed but before title to the condo is transferred out of your name, will be your responsibility to pay.
The creditor attorney is required to stay all judgments and dismiss all pending lawsuits when you file bankruptcy. Since it is an HOA, they may also motion for relief in your bankruptcy case, depending on what chapter you filed and the status of your case. If you don't have an attorney, consider talking to one.
The DiGiulio Law Firm, LLC.
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