MartinH2 (Florida)
Posts: 24
Posts: 24
Posted:
When a homeowner goes Chapter 7 is our HOA prevented from enforcing our Docs with regards to non monetary rules?
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Chapter 7 Rules
Started by MartinH2 • 17 replies • 2155 views
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TimB4 (Tennessee)
Posts: 21,047
Posts: 21,047
Posted:
I don't think so. Bankruptcy, if granted, just forgives or reduces financial debt. The member still has to comply with the covenants.
Once chapter 7 is granted, the member typically gets a clean slate and past debt is waived. They will start owing assessments from the court ruling forward.
You may want to let your Association attorney know about the Chapter 7 issue. There may be things the Association can do to at least get some of the money.
Tim
Once chapter 7 is granted, the member typically gets a clean slate and past debt is waived. They will start owing assessments from the court ruling forward.
You may want to let your Association attorney know about the Chapter 7 issue. There may be things the Association can do to at least get some of the money.
Tim
MelissaP1 (Alabama)
Posts: 13,836
Posts: 13,836
Posted:
I don't believe that HOA dues are part of the chapter 7. The owner is still responsible for paying their dues. HOA dues work more like "Utilities" than "Credit card" bills. The rules still apply to them whether they are paid members or not paying member. As long as they are a member, they have to adhere to the HOA rules.
If the member owes dues of significant amount, it may want to check into filing a lien against them. Chapter 7 filing is usually a short stop between full on bankruptsy, foreclosure, or a short sale on their part. The HOA needs to act ASAP if it wants to get on the list of debtors this person may owe. Don't make any bets the HOA would ever collect, but don't neglect the situation either.
If the member owes dues of significant amount, it may want to check into filing a lien against them. Chapter 7 filing is usually a short stop between full on bankruptsy, foreclosure, or a short sale on their part. The HOA needs to act ASAP if it wants to get on the list of debtors this person may owe. Don't make any bets the HOA would ever collect, but don't neglect the situation either.
Former HOA President
TimB4 (Tennessee)
Posts: 21,047
Posts: 21,047
Posted:
Martin,
Here is a link to a thread on this forum that discussed HOA Fees and Bankruptcy
you might find it interesting reading
Tim
Here is a link to a thread on this forum that discussed HOA Fees and Bankruptcy
you might find it interesting reading
Tim
BradP (Kansas)
Posts: 2,640
Posts: 2,640
Posted:
Martin
Chapter 7 is only protection against monetary and only provides protection for debts incurred prior to and up until the filing. The HOA would not be permitted to seek payment on those debts while the party is in bankruptcy proceedings, provided that the party put that debt on their bankruptcy filings. If they don't put you down as a creditor then they are fair game to collect from.
Yes, Dues can be part of a bankruptcy filing. The HOA is a secured creditor just like a mortgage company and we have had folks who have done that. You simply follow the courts order, a lot of different scenarios can play out. To make sure you don't break any laws I would always get the advice of your attorney if the HOA is listed as a creditor in any bankruptcy proceeding.
Chapter 7 is only protection against monetary and only provides protection for debts incurred prior to and up until the filing. The HOA would not be permitted to seek payment on those debts while the party is in bankruptcy proceedings, provided that the party put that debt on their bankruptcy filings. If they don't put you down as a creditor then they are fair game to collect from.
Yes, Dues can be part of a bankruptcy filing. The HOA is a secured creditor just like a mortgage company and we have had folks who have done that. You simply follow the courts order, a lot of different scenarios can play out. To make sure you don't break any laws I would always get the advice of your attorney if the HOA is listed as a creditor in any bankruptcy proceeding.
PeterD3 (Florida)
Posts: 708
Posts: 708
Posted:
Quote:
Posted By MartinH2 on 11/30/2011 9:58 AM
When a homeowner goes Chapter 7 is our HOA prevented from enforcing our Docs with regards to non monetary rules?
When a homeowner goes Chapter 7 is our HOA prevented from enforcing our Docs with regards to non monetary rules?
Yes, The HO can also now shoplift, run stop signs, and steal from the Girl Scouts with no fear of prosecution.
Just kidding, one has NOTHING to do with the other! ;)
JeffR7 (California)
Posts: 251
Posts: 251
Posted:
I hope you had a lien recorded before the filing. If you did the bankruptcy may wipe persons personal debt, but not the lien. Many times property owners will reaffirm their mortgages because they want o keep the house. Consult with an attorney.
BradP (Kansas)
Posts: 2,640
Posts: 2,640
Posted:
Quote:
Posted By JeffR7 on 12/01/2011 6:42 AM
I hope you had a lien recorded before the filing. If you did the bankruptcy may wipe persons personal debt, but not the lien. Many times property owners will reaffirm their mortgages because they want o keep the house. Consult with an attorney.
I hope you had a lien recorded before the filing. If you did the bankruptcy may wipe persons personal debt, but not the lien. Many times property owners will reaffirm their mortgages because they want o keep the house. Consult with an attorney.
That is correct, unless you are so far under that they loose the home as well...
KarenT (Washington)
Posts: 250
Posts: 250
Posted:
Quote:
Posted By BradP on 12/01/2011 8:01 AM
Posted By JeffR7 on 12/01/2011 6:42 AM
I hope you had a lien recorded before the filing. If you did the bankruptcy may wipe persons personal debt, but not the lien. Many times property owners will reaffirm their mortgages because they want o keep the house. Consult with an attorney.
I hope you had a lien recorded before the filing. If you did the bankruptcy may wipe persons personal debt, but not the lien. Many times property owners will reaffirm their mortgages because they want o keep the house. Consult with an attorney.
That is correct, unless you are so far under that they loose the home as well...
We recently had a homeowner who "surrendered" their home in the Bankruptcy and the HOA was never notified. They were current on their dues and once the bankrutcy was final they quit paying their dues. We've told them they are still liable because they are still the legal vested owner - the property has not been transferred out of their name. Anyone have any insight regarding this???
BradP (Kansas)
Posts: 2,640
Posts: 2,640
Posted:
Karen:
if you weren't notified by the bankruptcy court then they probably didn't put you down as a creditor and if they didn't owe money then that is probably why. I don't know the specific laws in your state but generally if you don't list a debt in your bankrupcty is it fair game to be collected and bankruptcy is only applicable to debts accrued up to the filing. In this case if the home is still in their name i woudl say they owe dues...i woudl consult your attorney though
if you weren't notified by the bankruptcy court then they probably didn't put you down as a creditor and if they didn't owe money then that is probably why. I don't know the specific laws in your state but generally if you don't list a debt in your bankrupcty is it fair game to be collected and bankruptcy is only applicable to debts accrued up to the filing. In this case if the home is still in their name i woudl say they owe dues...i woudl consult your attorney though
MelissaP1 (Alabama)
Posts: 13,836
Posts: 13,836
Posted:
They can't get out of paying their dues if they still are members of the HOA. The HOA can place a lien on them for non-payment of dues just like anyone else. As long as they are owners, they are members. All members are subject to the same rules and enforcement. It may be time for a trip to the attorney's office to file a lien...
Former HOA President
JeffR7 (California)
Posts: 251
Posts: 251
Posted:
If they filed bankruptcy and listed you as a creditor it means that absolutely no collection activity may be performed against that owner. Placing a lien is a collection activity and therefore is prohibited until the bankruptcy is discharged.
MelissaP1 (Alabama)
Posts: 13,836
Posts: 13,836
Posted:
I am not sure if HOA's fall under the classification of typical creditors. I like to say that HOA dues are like utilities or gym memberships. HOA's dues don't always qualify for reduction programs of the government. I've had some people on social security or disability that wanted a reduction on their HOA fees. We didn't have section 8 housing but don't think that excuses not paying full HOA dues. HOA dues work differently than regular debts.
It may be because HOA dues fall under "Membership" type of debts like gyms. Ever try to cancel a gym membership? It's very difficult and bankruptsy doesn't always obsolve that debt. I am sure someone more versed in this area can respond better. However, to assume the HOA can't collect against someone who has filed bankruptsy isn't necessarily accurate. It's just not very beneficial to pursue as you can't get blood from a turnip unless you cut yourself slicing into it...
It may be because HOA dues fall under "Membership" type of debts like gyms. Ever try to cancel a gym membership? It's very difficult and bankruptsy doesn't always obsolve that debt. I am sure someone more versed in this area can respond better. However, to assume the HOA can't collect against someone who has filed bankruptsy isn't necessarily accurate. It's just not very beneficial to pursue as you can't get blood from a turnip unless you cut yourself slicing into it...
Former HOA President
BradP (Kansas)
Posts: 2,640
Posts: 2,640
Posted:
HOA's are like normal creditors in a bankruptcy, they are a secured creditor but they are a normal creditor. If they listed you as a creditor you are breaking the law by trying to collect that money while they are going through the process. Once they are discharged then things are different and I would seek the advice of an attorney to help you. If you had a lien filed before they filed for bankruptcy then you should be ok, if you didn't it is possible that debt could get discharged.
JeffR7 (California)
Posts: 251
Posts: 251
Posted:
There is only one type of debt that cannot be discharged in a bankruptcy - government backed student loans. Absolutely everything else is a fair game, even taxes. Gym memberships definitely don't get any preferential treatment.
PeterD3 (Florida)
Posts: 708
Posts: 708
Posted:
From FINDLAW.Com:
"There are 19 categories of debt excepted from discharge under chapters 7, 11, and 12. A more limited list of exceptions applies to cases under chapter 13. The most common types of nondischargeable debts are:
•Certain types of tax claims,
•Debts not set forth by the debtor on the lists and schedules the debtor must file with the court,
•Debts for spousal or child support or alimony,
•Debts for willful and malicious injuries to person or property,
•Debts to governmental units for fines and penalties,
•Debts for most government funded or guaranteed educational loans or benefit overpayments,
•Debts for personal injury caused by the debtor's operation of a motor vehicle while intoxicated,
•Debts owed to certain tax-advantaged retirement plans, and
•Debts for certain condominium or cooperative housing fees."
"There are 19 categories of debt excepted from discharge under chapters 7, 11, and 12. A more limited list of exceptions applies to cases under chapter 13. The most common types of nondischargeable debts are:
•Certain types of tax claims,
•Debts not set forth by the debtor on the lists and schedules the debtor must file with the court,
•Debts for spousal or child support or alimony,
•Debts for willful and malicious injuries to person or property,
•Debts to governmental units for fines and penalties,
•Debts for most government funded or guaranteed educational loans or benefit overpayments,
•Debts for personal injury caused by the debtor's operation of a motor vehicle while intoxicated,
•Debts owed to certain tax-advantaged retirement plans, and
•Debts for certain condominium or cooperative housing fees."
MelissaP1 (Alabama)
Posts: 13,836
Posts: 13,836
Posted:
I just read an article on MSN.com about the misconceptions of filing for bankruptsy. They covered the Chapter 7 filing. Another debt not covered are those that are considered fraudelent.
Unfornately, I didn't have an oportunity to save the link. It should be available if you go to Msn and look under their money tab. They had multiple articles covering bankruptsy issues. The HOA factor isn't very typical situation that the information regarding how they are handled in a bankruptsy isn't well published. It does take some digging.
Unfornately, I didn't have an oportunity to save the link. It should be available if you go to Msn and look under their money tab. They had multiple articles covering bankruptsy issues. The HOA factor isn't very typical situation that the information regarding how they are handled in a bankruptsy isn't well published. It does take some digging.
Former HOA President
BradP (Kansas)
Posts: 2,640
Posts: 2,640
Posted:
The best advice any only advice anyone should take is to consult their attorney on bankruptcies...states varies, different chapters vary and they are consequences both monetarily and legally if you don't follow the law.
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