You have made the painful decision to declare bankruptcy and walk away from your home. Let the Bank have it you think – “No more mortgage payments and no more monthly payments to the Owners’ Association.”
Several months later, you might be surprised to hear from your HOA/COA’s attorney. Under the bankruptcy code, if you declare bankruptcy and abandon your home, you continue to be liable for Owner Association assessments until the bank completes its foreclosure, which can be many months down the road. This is true in both Chapter 7 & 13 cases.
The key point to keep in mind if you are a homeowner is to build this debt into your budget and if you are an association is to not immediately write off the debts of a homeowner who declares bankruptcy. If you are on an OA, the key point is that even if the former owner is judgement proof at the moment, Judgments are valid for a number of years and may be renewed. During that period of time, the former owner may develop the ability to pay the past due assessments, with interest.
This blog post is offered for general information and educational purposes only. It is not offered as legal advice and does not constitute legal advice or opinion. Although I intend to keep this information current, I do not promise or guarantee that the information is correct, complete, or up-todate. You should not act or reply upon the information in this post without seeking the advice of an attorney.