Can HOA sue while Ch 7 is still open?

[hteep123]

I filed for Ch 7 in Aug 2012. I was granted a discharge in Dec 2012. I have been trying to work through multiple short sales, but the bank is holding the price too high ($71,500 for a condo that could only hope to bring in $50k on a great day). I called the bank to consider a deed in lieu and they informed me that my case is discharged but still open. They said I would need to file a motion to allow them to move forward.

Later today, I received a certified letter from my HOA stating that I was responsible for over $1500 in dues. The letter said that if I do not pay the dues in 10 days, they will sue me and seek to garnish my wages. I responded with a phone call and certified letter informing them AGAIN that I declared bankruptcy and that I would like to see an itemized list of what they feel I owe. The last time I lived in the home (March 2012), the dues were $125/month. If they are assessing charges from AFTER I filed, that only leaves 10 months of dues which is $1250.

1 - Since my case is not closed, can the HOA sue me or are they attempting to collect a debt on an open Ch 7?
2 - Should I continue to call them and demand an itemized bill? Every time I call, I get an answering machine. I have never in 5 years living there actually spoken to a real person from this management company.

Thanks for the assistance!
HTeeP123

[justbroke]

1 - Since my case is not closed, can the HOA sue me or are they attempting to collect a debt on an open Ch 7?

Yes, they can sue you personally for anything for which you are responsible after the case was filed. This is specifically granted to them under 11 USC 523(a)(16). In other words, the day you filed, everything that you owed up to that date was "subject" to discharge. By "subject to discharge", I mean to say that those dues would be dischargeable and discharged upon entry of the order discharging the case. However, if the HOA dues were somehow a lien against your property, by operation of law or otherwise, then you may still need to pay them, in order to keep your property from being foreclosed upon.

However, I believe that you're asking if the HOA can seek what we call an in personam, or personal suit against you to collect fees and dues that have accumulated AFTER you filed. The answer is, yes.

2 - Should I continue to call them and demand an itemized bill? Every time I call, I get an answering machine. I have never in 5 years living there actually spoken to a real person from this management company.

You can seek an itemized bill, but my speculation is that the HOA is charging you for September, October, November, December 2012, January 2013, February, March, April, May and June which is 10 months or $1,250. They are probably adding attorney fees as well. I would feel pretty lucky that the "overdue" fees are only amounting to $250 at this point. When they attach attorney fees, you will probably see that amount double.

Unfortunately, unless and until the property is taken out of your name, you will be responsible for paying those dues per 11 USC 523 (a)(16). If it goes to their attorney, you will owe even more. If the attorney reduces it to a judgement, you'll probably see 3X what you owe now, or more, as the total due.

Personally, I believe Congress missed the boat on this part of the overhaul of the bankruptcy code (back in 2005). Clearly, someone who has surrendered and abandoned should not need to keep paying expenses associated with that home. For whatever reason, Congress chose to discharge the amounts prior to filing, but made it the responsibility of the individual (in personam) for the post-filing expense! Some States have done things to mitigate this large issue. For example, Florida "State" law makes the CREDITOR responsible for 12-months of the post bankruptcy HOA expenses or 1% of the balance, whichever is less. Even with Florida's generous stop-gap, to protect homeowners, foreclosures were taking as many as 3 years and homeowners will still being sued by the HOAs and stuck with many months of HOA dues/fees.

I was in a similar situation and paid my HOA the post-petition dues to avoid being sued.

[hteep123]

Thanks for the advice. In the grand scheme of things, $1500 isn't terrible. I am afraid of how much legal fees would bring. I won't be able to pay them until next month due to an IRS audit from 2011 that popped up 2 months ago. I will call them in the morning and see if they are willing to settle and accept payment next month.

Wish me luck and thanks again!

[justbroke]

Actually, you could ask them if you could pay in installments over 3 months. Explain the bankruptcy, which they should know, and perhaps they will understand.

[tobee43]

yes, i was going to say exactly what jb suggested. many hoa will work with you. revenues are down for towns, cities and hoa, so they are doing what they can to recover some of their badly needed funds. sometimes the people on the receiving end have been going though bk's etc., and are hard pressed financially so some of hoa will work with you. it's worth a try.