HOA is coming after me

[Rozi]

Hello! I need some advice... I brought my condo in Atlanta Georgia back in 2014 and was fine and great with the HOA. I had some hard times in 2017 and had to stop paying the HOA for a couple of months. My HOA fee is around 169 a month. I am now current but the back arrears are back to haunt me and now they have hired a lawyer. I have 30 days to cough up 16K or they will place a lien on the condo and take away my amenities. I am torn on what I want to do. I don't want to file Chapter 13 because I would only be filing because of the HOA. I thought about selling it and just taking the lost but then again I can't buy anything else because the housing market is just crazy here. Do I have any options? Should I hire a lawyer? Do I just suck it up and file Chapter 13 and stop my life for three or 5 years? Any comments or suggestions would be very helpful. I am legit stressing out over this. Thank you in advance!

[Carmella]

Is it too late or will they work out a payment plan with you? Were you also behind on your mortgage payment? 16K sounds like a lot was it more than just a couple of months for the HOA? I don't really understand what you are asking with the figure of 16K. What amenities would you lose, is there an option that the lien will be in place and you can pay back over time?

[flashoflight]

Sounds like there are a lot of fees (eg. lawyer, title search, interest, penalties, accumulated fines unrelated to the monthly HOA arrearage, etc.) baked in there over the years. The incurred costs by the HOA for the lawyer and title are real costs that will never, ever be waived. Maybe you can negotiate the other costs down or eliminate them in exchange for going on a payment plan of $500-700/month for 24 months.

Georgia's homestead exemption is quite low. If you file BK with unsecured debt at less than 100% payback, you might end up repurchasing some of your home equity unless you give up your home and pay the non-exempt amount to unsecured creditors.

If you let them put a lien on your house, there is a fair chance they will move to foreclose immediately without regards to you getting a fair amount for equity beyond the lien amount. Foreclosures have a bunch of fees as well which will rapidly eat away at whatever equity you have left. You've left them high and dry for four years already, so I'd expect an immediate foreclosure.

The bottom line is I don't think there is a way to avoid putting a pause on your financial life unless you are OK with being homeless.

[justbroke]

The incurred costs by the HOA for the lawyer and title are real costs that will never, ever be waived.

I agree that the HOA's costs will never go away. They use expensive attorneys and in my fighting them over a few hundred dollars, the bill turned into $20K in no time. Best not to hire an attorney which will just cost you more, then they will spend more, and they will be able to add all their costs onto your bill.

Rozi are you able to just obtain a HELOC or even just a loan to cover the $16K?

The bad thing about an HOA lien is that they may decide to collect it at any time. That usually involves a foreclosure action and you don't want that to happen.

[Rozi]

Thank you to everyone for your responses. It looks like I might just have to file a Chapter 13 and deal with this for 3 to 5 years or until I decide to sell the condo. What a nightmare and a lesson! I never want to live in another HOA ever again in life!!!

[Barbisi]

Rozi, 16k seems like way too little debt to have to file a forever life changing chapter 13 for.
Believe me once you're in you will sorely regret the loss of financial freedom! What if you decided to sell your condo in the next five years and weren't allowed to because of the trustee and court? (We want to sellout and leave Colorado while we can make a profit, but will have to wait til after Feb. 2022 when our 60th payment will post , and then until our case is discharged and closed.) Think it through -16k is not a lot of debt if that's all you owe!
I agree with you that HOAs are awful and luckily we have never owned (just rented for under three years when we lived in VA.) any HOA property.
If you sell now you could rent until the market cools off or even buy some non HOA property. If you file BK13 you will have no choice but to wait and pay the HOA over 36 -60 months, and then if you can sell, you may lose money if your home is worth less. And, you can't buy for a two year period with out very specific lender intervention until your Bk13 clears from your credit report.
We had over 100k CC home updates and repairs (not HELOC) and therefore were trapped -that is why we look forward to renting after we move out of state -no money pit house and hopefully, no repeat BK13!
I'm so burned out on the beauties of home ownership! For me,there's no glory in owning a home that leads directly to BK13.

Good luck on making the best decision for your situation!

[Carmella]

Barbisi I will respectfully disagree on the point that Rozi may have a lien put on the condo and could be expected to pay up or else (foreclosure) if there is not a way to get a loan for 16K it sounds like it could snowball out of control quickly.

I think Rozi should check out all options and see a BK attorney if for nothing else to see the options.

I think sometimes catching the problem early can help from it getting worse. It would have been much easier for us if we looked in BK sooner. Ours is over $100,000. If we had looked into BK when it was a lower amount we could have been out of debt sooner having our home/vehicles protected and not running the debt up even higher.

If Rozi doesn't mind staying put in the condo for 3-5 yrs and understanding they have to make the payment and be on a tight budget it could work in their favor. If Rozi ends up foreclosing or taking a personal loan for 16K they most likely will be in a similar financial situation or even worse with a foreclosure on their credit report and have difficulty finding a new place to live.

Either way it sounds like Rozi will have some financial changes to make in order to get out from under the $16K.

Depending on his/her income level $16K could be as difficult as 100K to manage. Also not knowing Rozi age makes a difference, too. I wish we had done it at younger age. I think those who go through BK at a younger age can have a better quality of life SOONER and enjoy more of their years.

[flashoflight]

If I did the math right, the original debt was $169/month for several months which is about $1k-$2k. It has already multiplied to $16k. A lot of it is lawyer fees and title fees. But the amount is so large that I suspect there are late fees assessed every month and monthly interest at credit card rates of around 20%. There is a letter of intent to file a lien. Why get the lien put in now? I think it's intended to start foreclosure proceedings right away while the market is hot so that the HOA can get its debt paid and get the law firm paid. Everyone gets paid to steal the equity from the homeowner. Bankruptcy would put a stop to the HOA and law firm adding extra costs, which will be substantial once foreclosure is filed. Time is of the essence.

[Rozi]

Hello and thank you so much for the reply! Let me answer the questions down below..

Yes, you are correct they are putting a lien on my condo and either I have to pay up or they will foreclose. They have also threatened to take away my access to the amenities. Please note that I am current on my current HOA dues. I have them automatically taken out.

My BK attorney told me I could file Chapter 7 and lose everything or file Chapter 13 and save everything but I would be stuck for 3 to 5 years.

I am a 41 year old single female who lives alone. Atlanta, Ga housing is crazy high right now. I make good money though and luckily I could either move back with my parents or find some roommates to lie with. My decision is do I even want to stay in Georgia and if I should just start over?

I will need to make a decision this week though so please send me good advice and vibes! Thank you!

Barbisi I will respectfully disagree on the point that Rozi may have a lien put on the condo and could be expected to pay up or else (foreclosure) if there is not a way to get a loan for 16K it sounds like it could snowball out of control quickly.

I think Rozi should check out all options and see a BK attorney if for nothing else to see the options.

I think sometimes catching the problem early can help from it getting worse. It would have been much easier for us if we looked in BK sooner. Ours is over $100,000. If we had looked into BK when it was a lower amount we could have been out of debt sooner having our home/vehicles protected and not running the debt up even higher.

If Rozi doesn't mind staying put in the condo for 3-5 yrs and understanding they have to make the payment and be on a tight budget it could work in their favor. If Rozi ends up foreclosing or taking a personal loan for 16K they most likely will be in a similar financial situation or even worse with a foreclosure on their credit report and have difficulty finding a new place to live.

Either way it sounds like Rozi will have some financial changes to make in order to get out from under the $16K.

Depending on his/her income level $16K could be as difficult as 100K to manage. Also not knowing Rozi age makes a difference, too. I wish we had done it at younger age. I think those who go through BK at a younger age can have a better quality of life SOONER and enjoy more of their years.

[Barbisi]

Hi Rozi!
I did look up your public BKForum profile and other posts . It does appear you have done two BK7s in the past but no BK13s.
IMHO the two chapters are wildly different -BK13 (my one and hopefully only bankruptcy experience) involves a 100% surrender of all financial assets as dictated by the court for up to five years until the trustee and creditors are satisfied you have repaid the maximum amount your income allows. Certainly not the "easy " way out of a 16K debt! (again only my opinion!)
Perhaps you could pay the maximum monthly and be done in less even than three years. (It is only $16,000 after all!)
But one thing did cause me to prick up my ears - you mentioned I believe, not liking or wanting to stay in Georgia. If you are already unhappy , your location misery will only increase over a possible five year stint in BK13 purgatory.
Questions to consider :
What kind of condition is your HOA condo in?Is it resellable now or does it need lots of work? Will you come out with any money in five years?(Hard to predict now, I know.)
Do you have family or friends nearby?Are you a native?
Where would you like to live?
Could your job be transferable?
Most BK13 debtors prefer staying where they are and do not like change - do you really want to remain in your condo or not? That is the bottom line!
Again best of luck and may you find the right path going forward.

[yourfired]

one reason i would never buy into an HOA. they can foreclose on you faster than the bank can and they get first dibs

[justbroke]

How fast a bank or an HOA can foreclose are the same. Banks just usually take their time where HOAs follow the timeline and maximize the impact. Both require notice. If it's a Deed of Trust then it's super easy for a bank or an HOA to foreclose within 90 days of notice. If it's a Deed of Mortgage with a judicial foreclosure process, it's just as hard for either an HOA or a bank to foreclose.

The bottom line is that it's the same set of rules on foreclosures regardless of the entity suing for foreclosure. The HOAs are just more streamlined like a debt collector as they hire local HOA attorneys who do this day in and day out.

State Specifics: HOAs do not get first dibs in most States (including Florida). An HOAs priority is (usually) below any first mortgage and there are other super liens which have priority over a first and any junior liens. For example, taxes are a super lien and have super priority. HOA debts are (usually) not a super lien. In California, HOA liens are not super liens as they only enjoy priority over things recorded after the HOA lien is recorded. That means that first mortgages almost always have priority (in most States).

An HOA's lien is also extinguishable in a foreclosure action initiated by a lender. Even if an HOA foreclosed on a property, the priorities are still intact. The HOA would be subordinate to the priority lienholder(s). (Any subordinate lien holder could do this anyhow, so it's nothing special.) If the HOA tried to sell, they'd have to satisfy the superior liens first. The HOA, without selling, would be then subjected to the priority lienholder(s) foreclosing.

There were some interesting cases in Florida which covered this quite well: at least for Florida and real property liens in general.

[flashoflight]

20 states allow HOA liens to partially be super liens. That will cause the 1st mortgage lender to pay off the super lien just like they pay off tax liens. Georgia is not a super lien state.

If prices have risen enough, it may be worthwhile for the HOA to quickly foreclose on the condo since it will be enough to pay the senior lien and the HOA. Prices have gone up A LOT in many parts of the country.

[justbroke]

As flashoflight and I mentioned, the priority of an HOA lien will vary by State. Even in Florida, HOAs have a statutory lien, but priority is not asserted unless and until recorded. As suggested, there are games the HOA can play if it wants to not pay the superior liens. Equity will be the biggest issue but the HOA can usually foreclose on their lien and just hold the property (hopefully paying the first mortgage).

One of the cases in Florida was that a debtor was trying to get the bank to foreclose. Bank would not foreclose, so the debtor stopped paying the HOA. The HOA moved to foreclose and the question became who had legal title. It was a mess.

An HOA could foreclose its lien even though subjected to higher priority liens (such as a mortgage or tax). The HOA gets title and can then rent out the property, if they so chose. I guess a lot would depend on the financial condition and power of the particular HOA and what types of tactics they use to collect.

It may be better today than it was during the housing crisis. During the crisis, everything slowed down dramatically.

[yourfired]

20 states allow HOA liens to partially be super liens. That will cause the 1st mortgage lender to pay off the super lien just like they pay off tax liens. Georgia is not a super lien state.

If prices have risen enough, it may be worthwhile for the HOA to quickly foreclose on the condo since it will be enough to pay the senior lien and the HOA. Prices have gone up A LOT in many parts of the country.

hosing prices are crazy right now. with the sellers getting crazy and the buyers getting crazier. i would never buy a house now let alone build one with lumber sky rocketing