Received a summons...

[justdidit]

...for HOA fees.

I did file for bankruptcy in 2010 and was discharged in November and know that HOA fees after the date of filing are still owed. I haven't worked since November 2010 (can't land a job) and haven't paid a HOA fee since November 2010.

Amounts of under $5,000 not including attorney's fees and court costs (which will then put it over $5,000). They're attempting to collect for full year's (2011) HOA fees even tho the property is in foreclosure (which the bank has paused).

What happens at summons? Should I send in the "Intent to Defend" page? If I don't have a job to garnish wages what can they do? I have about $300 in the bank and it's doesn't seem like its going to go up any time soon.

Also, my ex is also on the line. According to the summons papers, she will also be served with papers. How does this play into the collection process/debt?

Thanks

[justdidit]

Anyone?

[treehugger1]

I don't have any knowledge or experience dealing with homeowners associations. It appears you have been sued. If they get a default judgment then they might get a lien against your home. They will also have access to any assets that are not protected under exemptions.

In terms of your ex-wife, well she is most likely as responsible as you for the debt. I don't know Maryland laws.

I do wonder why you did not walk away from the home under what I assume was a chapter 7 bankruptcy. In late 2010, you obviously knew your home was probably worth far less than some previous value and any equity would not come roaring back. Why keep a house where you are bankrupt and know you are still responsible for taxes, HOA fees, etc? I'm just curious.

[justdidit]

There aren't that many assets and after looking at the exemptions they can't touch anything I have.

It was chapter 7 and it was my understanding that it's still my responsibility until the foreclosure is done. I don't want to keep the house and there is no equity in it, but the bank won't take possession as they have put the foreclosure process on pause. This is right...right?

[bcohen]

I don't have any knowledge or experience dealing with homeowners associations. It appears you have been sued. If they get a default judgment then they might get a lien against your home. They will also have access to any assets that are not protected under exemptions.

In terms of your ex-wife, well she is most likely as responsible as you for the debt. I don't know Maryland laws.

I do wonder why you did not walk away from the home under what I assume was a chapter 7 bankruptcy. In late 2010, you obviously knew your home was probably worth far less than some previous value and any equity would not come roaring back. Why keep a house where you are bankrupt and know you are still responsible for taxes, HOA fees, etc? I'm just curious.

In bankruptcy, there is no option called "walk away". You choose an action for your intent however just because a person puts down that they want to surrender their "underwater" house does not mean that the bank will foreclose anytime soon. And the more "underwater" the house is, the less of an incentive the bank has to foreclose--especially when there's a HOA or other ongoing expense that the bank would be responsible for once they foreclose. So for all we know, the OP wanted to surrender the house, and may not even be living there anymore. Unfortunately, since HOA liens are usually extinguished in foreclosure, the HOA attorneys are going after former homeowners who--if they already filed for bankruptcy--are stuck with the debt!

One of the many reasons why I would not buy a home in a HOA, and you could not give me one for free either!

[treehugger1]

I have to wonder why a friend of mine BK'd his HOA along with stopping payments on his mortgage. However, it was my understanding that the HOA is now just any other creditor in the BK 7 matrix. His attorney has told him he no longer had any obligation to the HOA. Sounds like a walk-away to me. What am I missing here? Could it be that homeowner/mortgage/foreclosure laws vary from state to state? Please enlighten me with a one-size-fits-all BK ruling. Thanks.

[bcohen]

I have to wonder why a friend of mine BK'd his HOA along with stopping payments on his mortgage. However, it was my understanding that the HOA is now just any other creditor in the BK 7 matrix. His attorney has told him he no longer had any obligation to the HOA. Sounds like a walk-away to me. What am I missing here? Could it be that homeowner/mortgage/foreclosure laws vary from state to state? Please enlighten me with a one-size-fits-all BK ruling. Thanks.

What you are missing here is the timing of the bankruptcy versus the foreclosure/sale/short sale (if any). It is true that bankruptcy allows you to discharge personal liability for any HOA dues arrearages (i.e. money owed to the HOA on the date that you file), however you cannot discharge liability for dues/fees/special assessments which accrue after the filing date. Your liability continues until your name is removed from the deed, either through foreclosure or some other sale process. (And of course any liens which the HOA placed on your property before you filed are not extinguished in bankruptcy--i.e. you must pay the money if you want to keep the house--however you cannot be sued or garnished for this pre-filing debt.)

Therefore, if the bank decides to delay foreclosing, you remain liable for the HOA dues, fees, and special assessments--even if you chose to "surrender" your house in bankruptcy and/or no longer live there. Some HOA's choose to place liens against the property for these monies, however since some states limit the amount of liability which a foreclosing bank must pay, some HOA's choose to sue the (former) homeowner. This new debt cannot be discharged in bankruptcy for at least another 8 years, thereby exposing you to the most ruthless collection tactics.

This is one of the reasons why it is dumb to file for bankruptcy before your house is foreclosed if your ultimate objective is to surrender the house. If you wait to file until after the house is sold at a foreclosure auction (or the bank takes title itself as a REO) then you can discharge all potential liability related to the house--including HOA dues/fees--in your bankruptcy!

[jacko]

I am so glad that I did not file BK yet. I have been underemployed for years and collection proof. I see no reason to file under those conditions. I, to walked away from my condo. The HOA sued and got a worthless judgement that cost them over $1000 to obtain. The bank owns the condo and are responsible for the HOA fees. I am astounded that people who have been unemployed for awhile are in a rush to file BK.

Live cheaply now, which I don't seem to mine. I contribute to a 401k and IRA which are exempt from seizure. I think being a slave to a mortgage and car payments is no way to live.

[jacko]

Looks like the BK was a waste and did not solve your situation.

...for HOA fees.

I did file for bankruptcy in 2010 and was discharged in November and know that HOA fees after the date of filing are still owed. I haven't worked since November 2010 (can't land a job) and haven't paid a HOA fee since November 2010.



Amounts of under $5,000 not including attorney's fees and court costs (which will then put it over $5,000). They're attempting to collect for full year's (2011) HOA fees even tho the property is in foreclosure (which the bank has paused).

What happens at summons? Should I send in the "Intent to Defend" page? If I don't have a job to garnish wages what can they do? I have about $300 in the bank and it's doesn't seem like its going to go up any time soon.

Also, my ex is also on the line. According to the summons papers, she will also be served with papers. How does this play into the collection process/debt?

Thanks

[diychapter7]

This is really frustrating, I know! The bad news is that you might very well be on the hook for some of it. The good news is that you might, depending on what the fees are, talk them into reducing some of it. Make sure you get a very detailed accounting of what they are trying to charge. If you're feeling brave, you might even want to go to court. Whatever you do, make sure you respond to the complaint so you don't get a default judgment against you.

Bcohen is generally very right. Usually, most of your debts get discharged when you file. There's a wrinkle in the law for HOA fees, however. See 11 USC 523(a)(16). I would post the link, but I'm too new on bkforum to do it. Just look on Cornell's LII.

The language of 523(a)(16) says that a debt survives the discharge if it's:

for a fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor’s interest in a unit that has condominium ownership, in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest in such unit, such corporation, or such lot, but nothing in this paragraph shall except from discharge the debt of a debtor for a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case;

Like I said, I know it's frustrating. It's taking the banks forever to foreclose on these properties. And they probably don't want to be stuck with another one AND HOA fees too.

[treehugger1]

It is too bad that there is not some 'stay' in the BK proceeding until the Chapter 7 estate is fully accounted for, including any final home foreclosure.

[diychapter7]

That's a really great idea. If the HOA is entitled to keep charging, it might not help the bottom line, but I think it would really help give people some breathing room. There are all kinds of procedural problems with the idea, but at least it would give people in chapter 7 time to regroup.

Then again, an even better solution would be to change this part of the law! Or at least impose some kind of moratorium on it until this foreclosure mess sorts itself out. My understanding is that it showed up in 2005 along with BAPCPA (the change that created that complicated means test)--back when the real estate market was decent and lenders actually foreclosed..

It would also be nice if people knew more about this little wrinkle before they file.

[justdidit]

Fml...

[justdidit]

What happens if you have no wages to garnish and none of your assets can be seized due to the exemptions?

[jacko]

Nothing.

What happens if you have no wages to garnish and none of your assets can be seized due to the exemptions?