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Though homeowners’ dues might not be the first thing to come to your mind, it can be an important thing to be considered in your bankruptcy. These dues can include an array of fees like condo dues and other housing association fees.
It is important for you to understand that the unpaid dues always act as a lien on your properties, whether you have filed for bankruptcy or not. A lien is a right of property which is given to another entity or person in order to secure the debt payments. In case of an auto loan, a lien on the car is with the lender. So, if you fail to repay, you will lose the car. Similar is the case with a mortgage.
Homeowners’ dues which are unpaid are also liens. Typically, liens created before bankruptcy are retained even after bankruptcy. Thus, liens survive bankruptcy.
Now, you might not need to worry about the homeowners’ association dues, if you are going to surrender your house. But, if you are planning to keep the house, you should care about the dues as you would probably not want another lien on the house. You will have to meet your association to get this issue resolved. You could remove the arrearage these unpaid dues over your plan’s life in a Chapter 13 bankruptcy. In a Chapter 7 bankruptcy, you would need to use your association to resolve the arrearage, if you want to keep the house.
There is a possibility of personal liabilities more than just liens. As mentioned above, your lender can sell your car in case you do not make the car payments and then you will be responsible for paying the difference. You personally become liable for the debt as per the car note and the owed amount is not restricted to the item having a lien against it. Similar happens with homeowners’ association dues.
There are many non-dischargeable debts which are listed in Section 523 of the Bankruptcy Code, and it can make matters complicated. According to Section 523(a)(16), the “due and payable” homeowners’ association dues, while the property is owned by the trustee or the debtor, are non-dischargeable in bankruptcy. You might want to postpone the filing till a foreclosure on your property has happened, in case of substantial amount. However, such decisions must not be made without considering other concerns. If you have qualified for a Chapter 7 bankruptcy now, that does not mean that you will qualify for it later too. In many cases, it is best to file for bankruptcy as soon as you qualify for it instead of postponing and risking it.
You can visit Recovery Law Group or call on 888-297-6203 to get best advice about your financial options from the best bankruptcy attorneys of Los Angeles & Dallas, TX.