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Are Homeowners Association Fees Discharged in Bankruptcy?

by | Sep 1, 2023 | Chapter 11 Bankruptcy, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy

Are homeowners’ association (HOA) fees and assessments dischargeable in bankruptcy?

This is a question we often get from people who live in condominiums or communities that require all homeowners to be a part of an HOA and pay monthly fees and sometimes special assessments.

The answer to this question depends on whether the HOA fees became due before or after the date you file for bankruptcy. Generally fees assessed before the bankruptcy are discharged.

In this blog we will provide information on this topic and insights into the complexities surrounding HOA fees and bankruptcy.

HOA Fees or Dues Assessed Before the Bankruptcy Was Filed

Chapter 7 Bankruptcy

Homeowners association fees fall into two categories: pre-petition fees   (owed before the bankruptcy was filed) and post-petition fees (owed after the bankruptcy was filed.)

The general rule is that in a Chapter 7 bankruptcy, HOA fees and assessments that became due before the Chapter 7 bankruptcy was filed are dischargeable (eliminated). The pre-petition fees are treated basically the same as other unsecured debt, such as credit cards and medical bills which are also dischargeable.

Exception – When There Is a Lien

An exception to the general rule occurs when the HOA records a lien for the unpaid balance before you file the Chapter 7 Bankruptcy. In that case the debt for the HOA fees and assessments are a lien claim that will still be against the property after the bankruptcy is completed.

Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy  pre-petition HOA dues that are not subject to a lien are an unsecured debt treated like all other unsecured debts under the Plan.

If the HOA recorded a lien for the unpaid HOA dues before the Chapter 13 bankruptcy was filed, then that is considered a secured claim that can be paid through the bankruptcy if you want to keep your home.

What if the HOA is Suing you for Pre-Petition Fees?

If the Homeowners Association has sued you before you filed the Chapter 7 or Chapter 13 bankruptcy, the bankruptcy automatic stay  will stop the lawsuit and the HOA fees in the lawsuit that are not subject to a lien will be eliminated as they are a pre-petition debt.

Pre-Petition Wage Garnishments

If your HOA garnished your wages for dues or fees assessed before you filed bankruptcy, the bankruptcy will stop the wage garnishment.

HOA Fees or Dues Assessed After the Bankruptcy Was Filed

HOA fees that are due after the date you filed a Chapter 7 or a Chapter 13 bankruptcy are not discharged in the bankruptcy.

Homeowners are still liable for paying HOA fees as long as they still legally own the home. This is true even if you no longer live in the home or have abandoned the home.  It is also true even if you have moved out of the house and/or stated your intent to surrender the home in bankruptcy.

Even if the property is in foreclosure the homeowner is still liable for the post-petition HOA fees and assessments until the sheriff sale takes place or until some other transfer of title occurs such as a short sale or a deed in lieu of foreclosure.

What If I Don’t Pay Post- Petition Fees?

If you don’t pay the HOA fees due after your Chapter 7 or Chapter 13 bankruptcy is filed, the HOA can sue you for them.

Contact Us for Help With HOA Fees

If you are struggling financially and having difficulty paying your HOA dues or fees, we can help!  The attorneys at Levitt & Slafkes, P.C. can help advise you on a debt relief plan that best suits your needs. We work tirelessly to provide our clients with supportive, thoughtful representation. Contact Levitt & Slafkes, P.C., at 973-323-2953, or reach us online to schedule a free consultation on your specific situation.

We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years. The information on this website and blogs is for general information purposes only. Nothing should be taken as legal advice for any individual case or situation.