January 8, 2012
Q. It is known throughout the community that my neighbor filed for bankruptcy six months ago, and she continues to use the community pool and gym. This owner is also telling everyone that she does not have to pay assessments anymore. Is this true and what can be done?— C.S.
NaplesA. Many bankruptcy debtors (and attorneys) do not fully understand the debtor's assessment obligations in bankruptcy, particularly when there is a superior first mortgage. Although there are exceptions, the general rule is that an owner is responsible for paying all assessments due after the date the owner filed for bankruptcy. If the owner filed for bankruptcy on Dec. 15, 2011, for example, the owner is generally responsible for paying the Jan. 1, 2012 assessment.
The association's ability to collect, however, is limited by an "automatic stay" imposed by the bankruptcy court which prohibits the association's ability to collect any debt. The duration of the automatic stay depends on a number of factors, including whether the owner filed for bankruptcy under Chapter 7 or Chapter 13.
The association may suspend the owner's voting rights or the right to use the common amenities, but once bankruptcy court has ruled that the suspension of an owner's right to use the pool or gym violates the automatic stay. If the association wants to suspend the owner's right to use the pool or other amenities, the association should obtain relief from the automatic stay or use great caution to ensure that the automatic stay is not in effect.
this is a question and answer series and was too large to put in the flordia forum section, and i thought this particular part of the article may be of interest to the many florida members of this site having some of the basic questions and answers so many have dealing with HOA's. if you click on the link the rest of the article really doesn't deal with any BK questions, however, i thought this may be useful to some
Q. It is known throughout the community that my neighbor filed for bankruptcy six months ago, and she continues to use the community pool and gym. This owner is also telling everyone that she does not have to pay assessments anymore. Is this true and what can be done?— C.S.
NaplesA. Many bankruptcy debtors (and attorneys) do not fully understand the debtor's assessment obligations in bankruptcy, particularly when there is a superior first mortgage. Although there are exceptions, the general rule is that an owner is responsible for paying all assessments due after the date the owner filed for bankruptcy. If the owner filed for bankruptcy on Dec. 15, 2011, for example, the owner is generally responsible for paying the Jan. 1, 2012 assessment.
The association's ability to collect, however, is limited by an "automatic stay" imposed by the bankruptcy court which prohibits the association's ability to collect any debt. The duration of the automatic stay depends on a number of factors, including whether the owner filed for bankruptcy under Chapter 7 or Chapter 13.
The association may suspend the owner's voting rights or the right to use the common amenities, but once bankruptcy court has ruled that the suspension of an owner's right to use the pool or gym violates the automatic stay. If the association wants to suspend the owner's right to use the pool or other amenities, the association should obtain relief from the automatic stay or use great caution to ensure that the automatic stay is not in effect.
this is a question and answer series and was too large to put in the flordia forum section, and i thought this particular part of the article may be of interest to the many florida members of this site having some of the basic questions and answers so many have dealing with HOA's. if you click on the link the rest of the article really doesn't deal with any BK questions, however, i thought this may be useful to some
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