Can I Eliminate Homeowner’s Association (HOA) Dues In A Chapter 7 Bankruptcy?
The money that you owe to the homeowner’s association is not necessarily wiped out if you file for Chapter 7 bankruptcy. If you choose to remain living in the home, you can expect to have no other option than to continue making payments to the HOA as normal. On the other hand, surrendering the property does not always guarantee total freedom from fees. Every situation is unique and it’s necessary to evaluate your personal circumstances to figure out which solution works best.
Keeping Your Home
When giving up certain assets during a bankruptcy filing, it is not necessarily true that you’ll have to lose the home or condo that you’re currently living in. Even if you have fallen behind on payments to the HOA, if you want to retain the house then you’ll need to find a way to catch up. Do not neglect the debt accrued before filing, even if it is discharged in the arrangement. The lien itself is not discharged under these circumstances so failing to pay may result in foreclosure, which is going to require that you forfeit the property.
Surrendering Your Property
Depending on the severity of debt at the time of your declaration, forfeiting the property may be the only logical solution. Liability for the outstanding HOA fees prior to the date of the case filing are wiped out. However, additional fees accumulated until the home is sold are considered valid debt because you’ll still legally own the property. Even when the home is sold under foreclosure, the outstanding HOA fees may not be completely covered. Most people are completely caught off guard when the homeowner’s association files a lawsuit to recover unpaid dues that they assumed were cleared.
Tip for Avoiding Liability
The only way to make sure that you’re not stuck owing a debt in the future is to make smart moves prior to the Chapter 7 declaration. In some cases, it’s possible to come to an agreement with the homeowner’s association to dismiss any fees once the property is surrendered. If you are certain that you cannot afford to retain the home, sell it off before you declare so that you’ll no longer be the legal owner at the time of filing. The last option involves letting your home fall into foreclosure prior to filing the case.
If you’d like for a specialist to contact you regarding your financial options, take a moment to fill in our contact form. We’ll personally evaluate your unique circumstances and find the best solution to help your case.