YOUR HOA MAY SUE YOU EVEN AFTER YOUR BANKRUPTCY:
THE BANKRUPTCY CODE SPECIFICALLY ALLOWS IT! The Rule is that you can eliminate your personal liability to pay your Home Owner’s Association up to the date that you file your case. But what happens AFTER?
YOUR HOME OWNER’S ASSOCIATION CAN SUE YOU IF:
FILING BANKRUPTCY STOPS FORECLOSURE, BUT YOU MUST STILL EITHER WORK OUT A LOAN MODIFICATION OR SETUP A CHAPTER 13 PAYMENT PLAN IN ORDER TO STRIP OFF THE 2ND AND CATCH UP YOUR FIRST. IF ALL GOES WELL YOU WON’T THINK ABOUT YOUR HOA, YOU JUST CONTINUE TO PAY IT.
IF THE ABOVE DOESN’T WORK OUT, YOUR AIM MUST BE FOR A SHORT SALE to avoid a Foreclosure after Bankruptcy. Doing a Short Sale will take the Home Owner’s Association into account as part of the final deal and that will be that.
But if you end up with a Foreclosure after Bankruptcy . . .
FORECLOSURE AFTER BANKRUPTCY:
If you know that you can’t pay a Chapter 13 payment (YOU MUST CONSULT A BANKRUPTCY ATTORNEY TO BE SURE, NEVER ASSUME ONE WAY OR THE OTHER WITHOUT A CONSULTATION FIRST), & if you cannot pay your 1st, you are going to lose your property. So, File a Chapter 7 Bankruptcy: Your 2nd or HELOC will no longer be able to sue once your Chapter 7 has discharged. You can stay in the property a bit longer while saving up to move. You could get a couple or even several extra months Rent-Free! But if you don’t do a short sale, you will eventually have a foreclosure.
Your HOA will be able to sue you from the date that you filed your Bankruptcy until the day your property is foreclosed. I have seen this more than once, a couple assumes that a short sale is on track, and then it doesn’t go through. Meanwhile they have not been paying the Home Owner’s Association fees. Probably they haven’t paid for a year prior to filing the bankruptcy so they are out of the habit of paying it. Once the bankruptcy took place, they still didn’t pay because they couldn’t afford to, or they assumed that the short sale would take care of it.
But if you don’t pay, and there’s a foreclosure, you’re going to owe all HOA fees and assessments from the day that you filed until the day that you no longer owned the property. Because they banks don’t want to pay the HOA fees either, I have seen them take a couple years to actually repossess a house, especially if the family has already moved out. $150/mo in HOA fees plus special assessments, attorney’s fees and costs adds up pretty quickly.
SO CONTINUE TO PAY THE HOME OWNERS ASSOCIATION FEES UNTIL THE PROPERTY IS SOLD OR FORECLOSED. If you don’t want to pay the HOA Fees to the HOA because you expect a short sale to take care of it, put the HOA Fees into a savings account just in case the short sale doesn’t go through. If it doesn’t go through you just pay them. If it does go through, you have a small savings account to use as moving money, or maybe replacing your appliances.
Bankruptcy Attorney David NelsonTemecula bankruptcy attorney, Murrieta bankruptcy attorney, Lake Elsinore bankruptcy attorney, Canyon Lake bankruptcy attorney, Menifee bankruptcy attorney, Perris bankruptcy attorney, Riverside bankruptcy attorney, Corona bankruptcy attorney, San Diego bankruptcy attorney, Los Angeles bankruptcy attorney, LA, and Orange County bankruptcy attorney