Bankruptcy

Started by WilliamB13 • 7 replies • 1432 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

WilliamB13 (Florida)
Posts: 14

Posted:

One of our units has owed us money for a couple of years. We filed a lien about a year ago. They have since filed for Bankruptcy. Does this mean that there is no way we can get the money that is owed to us.

SheliaH (Indiana)
Posts: 6,964

Posted:

(Welcome to my world!)

Anyway...your chances of getting the money back depend on the type of bankruptcy filed. If it's chapter 7, the homeowner might give up the house, in which case any money that was owed up to the day of the filing is probably gone, unless the owner tells the court he/she wants to keep the house (in which case you might still be able to collect). Most of the time, the owner gives up the house, though.

If it's chapter 13, the homeowner will submit a repayment plan that has to be approved by the court - if the Association is listed as a creditor, it may get its money back, although it'll take years and will trickle in.

Now, the owner is still liable for any fees that accumulate AFTER the filing date (at least until he/she gives up the house), so you can go after that. In any case, make sure you're listed as a creditor in the filing.

I should also mention we have a homeowner whom we've battled for years - she declared chapter 13 late last year (probably because she figured it was another way not to pay as we were gunning for garnishing her paycheck). However, she didn't pay the fees that accumulated after that and so our attorney asked the court to lift the bankruptcy protection (there's a legal term for it, but I can't remember what it is). The court granted our request and now we're going to garnish the paycheck anyway. If your homeowner has made promise after promise to pay and didn't, you may want to inform the court and see how it responds. Good luck!

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

GlenL (Ohio)
Posts: 5,491

Posted:

William as Sheila mentioned you need to find out if they listed the HOA as a creditor, if they did, you can pretty much kiss what they owe the HOA good-by. If they didn't then they are still responsible for the fees and I wouldn't be in any hurry to point out their error to them, least they amend their filing. In the mean time you need to open a second file on them as they are responsible for all fees and fines accrued after the filing date.

Studies show that 5 out of 4 people have problems with fractions

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I believe a lien goes against the property and sticks with it until it is sold. Which it can't be sold until the lien is paid off. From experience, the HOA is still owed the money, just don't hold your breath in ever getting it. This also may be a case of investigating the foreclosure process. It's NOT always a good option for enacting foreclosure but there are circumstances that change that. Basically the HOA will be doing the work of the bank if the bank isn't foreclosing on them. This means the bank will receive all moneys owed to them and the HOA gets what is left over if any. Which 99% of the time is absolutely nothing but their legal bill still owed...A foreclosure simply just stops the bleeding. When your HOA decides enough is enough, then is the time to seriously consider this option and it's pitfalls...

Former HOA President

CynthiaF (Texas)
Posts: 5

Posted:

Bad news: If it is a Chapter 7 (liquidation), then they can do a Motion to Avoid Lien because it impairs the homestead exemption (particularly if it is worth less than they owe) - basically, the Federal Bankruptcy Court voids the lien and they continue to make payments to the first mortgage holder and get to keep the house. If it is a Chapter 13 (pay-back) and they want to keep the house, all they have to do is get a Real Estate Agent to certify that the house is worth less than what they owe and they can do a 'cram down' - which means they pay pennies on the dollar to a Trustee and he/she distributes the monies to the creditors. I am assuming you know they filed BK because you got a notice - that means that they listed you as a creditor - if you found-out 'through the grapevine' stay quiet. Then after the discharge, send your invoice or file suit as if the BK never existed - because if you weren't listed, then you are entitled to collect the debt - but be prepared for a paper fight with the attorney.

Good news: you are entitled to any fees they incure following the date of the FILING - not the discharge. Also, if they decide not to keep the house the lien is still in place and the bank will have to deal with it when they sell it - at which time you will be paid for the amount of the lien.

CarolF (Florida)
Posts: 435

Posted:

Posters - you may want to get some accurate FL information at this website........
http://www.bankruptcyorlando.com/

CynthiaF (Texas)
Posts: 5

Posted:

I used to work for a bankruptcy attorney.

BradP (Kansas)
Posts: 2,640

Posted:

Quote:

Posted By WilliamB13 on 09/02/2011 5:10 AM
One of our units has owed us money for a couple of years. We filed a lien about a year ago. They have since filed for Bankruptcy. Does this mean that there is no way we can get the money that is owed to us.

Every state is different, I would suggest getting advice from a lawyer that you can use now and in the futures. While Chapter 7 is liquidation it does not necessarily mean they are giving up their home. Some folks use this as a means to eliminate unsecured debt (credit card) and are able to keep their home. Unless they are in foreclosure and depending on state laws they are allowed to protect their home from the bankruptcy. One important key is if they listed you as a creditor, if they did there are steps you have to go through to protect the debt. If they didn't list it then it can't get discharged.

Chapter 13 is reorganization and repayment. Depedning on the amount owed and the notice you got I would suggest consulting an attorney.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here