In some cases, bankruptcy can provide a discharge of debts and relief from heavy financial burden, but then a seemingly random debt or financial responsibility will seem to have escaped the bankruptcy process. For many this comes in the form of Homeowners’ Association (HOA) dues and assessments on properties that they no longer hold legal financial responsibility for; it was included in their bankruptcy. In some cases, the individual could have walked away from the property and not set foot on it for years and the HOA will still insist that they are responsible for HOA dues and assessments that have accrued since the property was vacated. Most will insist that this is not possible.
The fact of the matter is, that it is possible. You can definitely be held responsible for unpaid HOA dues post-bankruptcy. Hopefully, your southern California bankruptcy attorney will advise you of this fact during the early stages of your bankruptcy filing so that you never end up in this type of situation. HOA dues and assessments that become due after your bankruptcy filing are your responsibility, even if you walk away from the property.
According to bankruptcy code, “…fees or assessments that become due and payable…to a membership…or homeowners’ association” after the individual responsible files for bankruptcy protection are exempt from bankruptcy discharge. To put it simply, you will still owe all fees and assessments that come due after you file for bankruptcy. Fees and assessments that were owed prior to filing were included in your bankruptcy, which will reduce your overall liability. It’s also very important to note that when you are keeping the property, you are responsible for all HOA fees and assessments, both those that come due before and after your bankruptcy filing. It’s not possible to eliminate past due HOA fees and assessments through bankruptcy protection if you are going to keep the property post-bankruptcy.
If you find yourself in this situation, you should probably consider working out a repayment plan with the HOA directly. You can usually negotiate with them to come up with an affordable payment. Some prefer to ignore the HOA and keep their fingers crossed that they won’t sue for payment although, in some instances, the HOA may no longer have the right to sue due to the statute of limitations. In extreme circumstances, it could be beneficial to file Chapter 13 bankruptcy. This would allow you to pay back some or all of the balance due the HOA over a three to five year period. This is only possible once four years have passed from the date of your Chapter 7 bankruptcy filing. You might also find it beneficial to use this the option to file for Chapter 13 bankruptcy as a negotiating tool in negotiations with the HOA. Lastly, you might benefit from waiting the eight years necessary between Chapter 7 bankruptcy filings and simply file again.