House With HOA Fees

[nioka]

I am filing in TN chapter 7. The attorney says I probably will be able to stay 4-6 months. The house is in a HOA.
I am wondering how the HOA fees play into this. Should I continue to pay the HOA fees to avoid action by the HOA?
(I didn't think to ask the attorney and I don't see him until next week).
New and confused.

Thanks

[despritfreya]

You are responsible for all HOA fees/dues/assessments that come due from the day you file bk until the day the property is either sold (short sale or regular), you sign a Deed in Lieu, or is foreclosed. Please discuss this with the attny.

Des.

[justbroke]

First, welcome to the forum!

As for the HOA dues, the HOA dues will be discharged, but if HOA in your State, enjoys a super or statutory lien, then the HOA could foreclose upon the home. I can't tell you what your HOA or your lender would do once your bankruptcy moves along and the case finally is discharged. (Or the lender/HOA files a Morison for Relief From Stay (MFRS).)

HOA dues that come due and owing after you file and before any foreclosure (by the HOA or Lender), are your responsibility. You may need to pay all dues that become due and owing after you file. (Florida law provides that the lender is responsibile for HOA dues for up to 12 months immediately preceding the foreclosure. I do not know if TN has similar laws. The HOA could come after you personally for dues owing after you file!)

I would certainly talk to my TN Bankruptcy Attorney for details.

[jacko]

I would wait until the bank takes possession of your property before you file, in which the HOA will be their responsibility. Than you can discharge outstanding previous HOA balance.

[justbroke]

I would wait until the bank takes possession of your property before you file, in which the HOA will be their responsibility. Than you can discharge outstanding previous HOA balance.

That is a very nice strategy, if you can get the bank to foreclose quickly.

[nioka]

Jacko,

Thanks to all who replied but after looking up case histories your post makes the most sense.

The way I interpret the various articles on the subject in TN the property owner is responsible for the HOA fees and those fees do not discharged with BK. The mortgage holder must take back the property in order to become responsible for the HOA fees. It seems to me the best way to proceed is to continue to pay the utilities and HOA fees and not pay the mortgage. I could also pay a minimum on my CC's. Then wait for the bank to foreclose to file.
However, the attorney I talked to told me that I should initiate the BK proceedings right away.

BTW, because of the HOA laws in TN most articles I have read state that banks are reluctant to foreclose. If I didn't have to make my mortgage payment I would be in fine shape. I think I need to see another attorney.

What do you think?

Thanks


BTW, the attorney I talked to said my BK would take about 4-6- months. I have no problem paying the HOA fees, $100, for that period. I do have a problem if after the BK I still owe the HOA that $100 every month.

[justbroke]

You actually can discharge HOA dues in a bankruptcy, and it is spelled out quite clearly in 11 USC 523(a)(16) " 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". In that same paragraph, 11 USC 523(a)(16) puts the responsibility on the homeowner for dues/fees/assessments that are assessed after the petition is filed, on the owner. (I know this very specifically in that I fought with my HOA on this specific topic and won.)

The question is really, do you do what I did? I discharged the HOA dues but I did not pay the ones before filing. I am going to do a (relatively short or pretty close) short sale, but I have paid all the HOA dues since the petition was filed.

If you are unsure, you really should speak to your attorney. HOA dues are absoutely dischargeable and discharged if they came due prior to the date of filing. If you want to keep the property, however, you may need to pay the pre-petition dues based on any statutory (or secret) lien that the HOA enjoys, or a lien that the HOA actually recorded.

(The other question is the lien and how it may attach to the property. Even though the debt, prior to filing, is discharged, the lien will still be there (if it's statutory in TN or if the HOA filed a lien).)

[ValleYum]

IMO, you would need to pay the HOA dues after you receive your discharge. Stay at the house as long as you can... Our house was IIB when we filed in 12/2010. Our last payment was 09/2010 and we just completed a DIL last month with Chase. We never even had a sheriff's sale scheduled.... just got lots of mod offers. 36 months without payment but we did continue to pay the HOA. We moved after 24 months and paid the HOA feees after that, too. We just considered it really cheap rent when the $ we paid to the HOA over 36 months was compared to the 24 months we had without a mortgage payment. YMMV

Good luck!

[nioka]

JustBroke

Thanks for the explanation.

I am somewhat confused on this issue. I was impressed with this attorney but he was the first one I talked with. Now that I think about it I did get the sense that he was pushing me into filing. Maybe I should slow down here and talk with a few more. This attorney did tell me he could not advise me on whether to pay any bill or not. With CC I can understand but with things like HOA fees and their implications I think the attorney should advise.

The thing is I am not behind in anything yet. I am going to call another lawyer tomorrow.

I'm getting too old for this crap. I'm at the time in my life when my only worry should be if my flies or zipped or not.

[justbroke]

As ValleyYum writes, I too continue to pay my HOA dues since I filed. I did not pay the pre-petition HOA assessments, but this is a strategy and by choice. (The HOA will not likely foreclose and I'm going to sell slightly short real soon now. Maybe I can even get myself a carve-out... but that's another story.)

[bcohen]

Hi, nioka. Am I to understand that your endgame is to surrender the house and quit paying the mortgage? If that is the case, then the consensus is that it's best to delay filing for bankruptcy until after the house is foreclosed or short-saled, and the deed is out of your name. This is especially important when the house is in a HOA. The reason is quite simple--you do not want to be stuck for HOA dues and/or special assessments, which come due after you file, and could result in a lawsuit and garnishment action against you. Some HOA's are extremely aggressive in this regard!

If you wait to file, you can quit paying the mortgage, HOA dues, property taxes, credit cards, and whatever other debts you were planning to discharge. You can continue to live in the house, payment-free, and wait for the bank to foreclose. You may discover that the bank is in no hurry to foreclose, and enjoy several years of rent-free living in your house!

If and when the bank finally chooses to foreclose, then you move out and find an apartment, and once the deed is transferred out of your name, then you file for bankruptcy. In that case, you will be able to discharge any and all HOA dues/fees/penalties, because bankruptcy can only discharge money owed to an HOA which was incurred before the filing date.

[nioka]

ValleYum, justbroke, bcohen,

Thanks for your posts.

Now it is clear that dumping the HOA fees is top priority. The only way to do that is to dump the house but after my research, and just as you say, the bank will not be in any hurry to foreclose. The HOA will not be in any hurry to sue for possession as that will also end my obligation to pay the HOA fees.
First step then is to continue to pay my other bills including the HOA fees and not the mortgage. When the house is foreclose then I can continue with bankruptcy. This makes sense to me and I don't know what the attorney I talked to didn't tell me the same thing.
I am definitely calling another attorney.

I did talk to a real estate agent and the houses at my location are not selling. I bought with no money and therefore there is only $4k in equity.

[bcohen]

If you are not keeping the house, don't pay the HOA. Simply wait to file for bankruptcy, and then the HOA dues will be discharged, along with the mortgage!

[nioka]

I was thinking that when a house is foreclosed the sheriff comes by and throws the contents and the residents on the street. I am wrong?

I now have another issue. I have a fine issued by the HOA for a frivolous matter but it is for $1200. Now I will not be making mortgage payment, HOA payments, and the HOA fine. All of which are cause for liens and foreclosures. From what I have read typically the HOA will try to foreclose first and the back is forced to be right behind them. I am just now sure how this will all play out.

If anybody has been thru this please let me know what to expect. Thanks.

I'm trying not to find myself sitting on the street unexpectedly.

[bcohen]

When the house is eventually sold or foreclosed, it is up to the new owner--which may be the HOA, some private investor, or even the mortgage lender--to get the previous owner (you) out. Normally, they will offer a reasonable amount of time (at least 30 days) and possibly also offer a small amount of money to pay your moving expenses (cash for keys) before they would try to initiate eviction proceedings. The new owner would much rather you leave on good terms, because they know that when evicting the previous owner, lots of "accidental" damage (notice the word is in quotes) is likely to occur. It is thus, in their financial interest to have the previous owner leave on good terms. If an when the house sells, contact the new owner to negotiate a reasonable move-out timeframe.