Can your Home Owner Association (HOA) "get you" for dues and fees after you file bankruptcy? Will using the wrong lawyer for bankruptcy "cost you"? Yes, and yes! We often answer bankruptcy questions from troubled folks around the country. I'm sharing a question and a situation today that we see a lot. If you are in foreclosure and expect to give up your home, please meet with a qualified bankruptcy lawyer if you want to avoid serious problems, including this:
This happens far too often and could be the result of bad bankruptcy advice or poor communication between a client and his lawyer. So, what would I tell Ken?The bankruptcy law was amended in 2005 to provide that HOA fees accrued AFTER the date of a bankruptcy filing are still due and collectible from a debtor.
A bankruptcy lawyer should advise a client of this fact. The client above should have had a discussion about the option of filing bankruptcy after the bank had completed a foreclosure sale. Filing bankruptcy after the date of the foreclosure sale would allow a discharge of any accrued HOA fees.
At this point, the client above has limited options. He can and should demand an itemized accounting from the HOA. The accounting would allow him to divide the bill into—(a) fees accrued prior to the bankruptcy, which are dischargeable; and (b) fees accrued after the bankruptcy filing date, which are not dischargeable. I strongly suspect the $22,000 includes fees accrued prior to filing, as well as after.
I don't know what could be realistically done to make the bank foreclose any faster. We actually see some banks going very slow on condo foreclosures specifically because of HOA fees and liability. They don't want to be saddled with HOA fees until they are good and ready to take over the unit and put it into the saturated marketplace.
Is it possible that the client lived in the home during the 18-month period he is asking about (without paying the bank)? If so, then another way to look at the situation is that he picked up 18 months of free rent. If this happened, then the HOA fees should be viewed as a cost that really covers providing the client with upkeep and amenities he had as a resident.
In any event, it is crucial for a prospective client to understand their options before filing a bankruptcy. And in the case of HOA debts prior to and during a foreclosure, you need to understand the way your bankruptcy case will affect your financial future. Then you can make informed decisions for yourself. If bankruptcy is an alternative for you, please get yourself to an experienced and qualified bankruptcy lawyer so you can review your options and make good decisions.
Bayer, Wishman & Leotta remains committed to providing solid, experienced bankruptcy advice in the Los Angeles area, including downtown Los Angeles, West Los Angeles, Long Beach and the San Fernando Valley. My partners and I are California State Bar Certified Bankruptcy Specialists with decades of experience. Please find a good lawyer and you won't get burned by bad advice.
Ken writes—"I filed bankruptcy in 2008 and let my home go to foreclosure. My HOA fees were almost current when I filed. My attorney advised me not to pay any more HOA fees—that I would be protected by my bankruptcy. It took about 18 months after my bankruptcy for my bank to take possession of the property. Now the HOA wants me to pay all the past due fees (about $22,000) before the bank took possession. Am I responsible? I can't afford to pay. What can I do? This has caused me so much stress that I haven't been able sleep lately and it is affecting my health."
This happens far too often and could be the result of bad bankruptcy advice or poor communication between a client and his lawyer. So, what would I tell Ken?The bankruptcy law was amended in 2005 to provide that HOA fees accrued AFTER the date of a bankruptcy filing are still due and collectible from a debtor.
A bankruptcy lawyer should advise a client of this fact. The client above should have had a discussion about the option of filing bankruptcy after the bank had completed a foreclosure sale. Filing bankruptcy after the date of the foreclosure sale would allow a discharge of any accrued HOA fees.
At this point, the client above has limited options. He can and should demand an itemized accounting from the HOA. The accounting would allow him to divide the bill into—(a) fees accrued prior to the bankruptcy, which are dischargeable; and (b) fees accrued after the bankruptcy filing date, which are not dischargeable. I strongly suspect the $22,000 includes fees accrued prior to filing, as well as after.
I don't know what could be realistically done to make the bank foreclose any faster. We actually see some banks going very slow on condo foreclosures specifically because of HOA fees and liability. They don't want to be saddled with HOA fees until they are good and ready to take over the unit and put it into the saturated marketplace.
Is it possible that the client lived in the home during the 18-month period he is asking about (without paying the bank)? If so, then another way to look at the situation is that he picked up 18 months of free rent. If this happened, then the HOA fees should be viewed as a cost that really covers providing the client with upkeep and amenities he had as a resident.
In any event, it is crucial for a prospective client to understand their options before filing a bankruptcy. And in the case of HOA debts prior to and during a foreclosure, you need to understand the way your bankruptcy case will affect your financial future. Then you can make informed decisions for yourself. If bankruptcy is an alternative for you, please get yourself to an experienced and qualified bankruptcy lawyer so you can review your options and make good decisions.
Bayer, Wishman & Leotta remains committed to providing solid, experienced bankruptcy advice in the Los Angeles area, including downtown Los Angeles, West Los Angeles, Long Beach and the San Fernando Valley. My partners and I are California State Bar Certified Bankruptcy Specialists with decades of experience. Please find a good lawyer and you won't get burned by bad advice.
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