If you are a member of a homeowner’s association (HOA) and you are considering filing a personal bankruptcy, you it is important to understand how your HOA fees are treated in your case. HOA fees are given certain protection that can result in you being held liable to pay them, even though you have filed bankruptcy. This is true even if you have moved out of your home!
Pursuant to 11 USC 523(a)(16), debts are excepted from discharge if they are
“for a fee or assessment that becomes due and payable after the order for relief to a membership association . . . . for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest in such unit. . . .
The above statute triggers liability if you have a “legal, equitable or possessory ownership interest.” Thus, when you file a Chapter 7 of Chapter 13 and move out of your home, your ownership interests are not eliminated until your home is sold or foreclosed upon.
If you are delinquent on your HOA dues and you want to file a personal bankruptcy case, discuss it with us ahead of time. In many instances, the HOA fees can be paid out of the eventual foreclosure sale since HOA fees have priority over the foreclosing party’s lien.
In some cases, a client may wish to pay the HOA fees until the home has been sold or foreclosed. You may also want to save your HOA fees that come due after the bankruptcy filing in trust pending the outcome of the sale. This allows you to have the funds available if the liability comes dues. It is better to be prepared and have a savings account set aside.
Contact The “Milwaukee Bankruptcy Attorneys,” DeLadurantey Law Office, LLC. DeLadurantey Law Office focuses on student loan debt, Chapter 7 and 13 bankruptcy, debtor’s rights, debt negotiations, debt relief, mortgage loan modifications, and foreclosure defense. A “defender of the little guy, “DeLadurantey Law Office serves the following location – Milwaukee, South Milwaukee, West Milwaukee, Waukesha City, Waukesha Town, Kenosha, Racine, and all other municipalities in Milwaukee County, Waukesha County, Kenosha County, and Racine County. We can be contacted by phone: (414) 377-0518 and can be found on the Internet and on Facebook.