Bankruptcy and lost reg. fees

Started by RobynH1 • 12 replies • 1474 views

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RobynH1 (South Carolina)
Posts: 39

Posted:

Bankruptcy is filed with past late fees included. No lien was filed at the time of
the bankruptcy.

Owner still lives here not paying fees currently

What is the HOA right to past fees? Nothing?

Can the HOA do business as usual and place a lien on said property
for current fees in arrears after the bankruptcy filing date
and future fees that may not be paid?

It was my understanding after bankruptcy settlement all debt starts over
and is expected to be paid as agreed. Or debtor may agree to make installments
in some cases for Home and auto etc.

DonA2 (Arizona)
Posts: 170

Posted:

Depends on the type of bankruptcy first off.

I believe all debt will be wiped clean. So anything owed will be written off.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By RobynH1 on 01/14/2016 2:35 PM
Bankruptcy is filed with past late fees included. No lien was filed at the time of the bankruptcy.

Owner still lives here not paying fees currently

What is the HOA right to past fees? Nothing?

If bankruptcy court awards Ch 7 bankruptcy, old debts are wiped out.

Quote:

Posted By RobynH1 on 01/14/2016 2:35 PM
Can the HOA do business as usual and place a lien on said property for current fees in arrears after the bankruptcy filing date and future fees that may not be paid?

Yes. Only the old amount is excused.

Quote:

Posted By RobynH1 on 01/14/2016 2:35 PM
It was my understanding after bankruptcy settlement all debt starts over and is expected to be paid as agreed. Or debtor may agree to make installments in some cases for Home and auto etc.

I'm guessing that home and auto were secured debts that were not excused in bankruptcy. Unrelated to HOA obligations.

Sikubali jukumu. Read all posts at your own risk.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Robyn

Generally once one files for bankruptcy they are so far down the toilet they could care less about anything, especially their HOA. The only owner we have had that we have not been able to eventually collect from was one that filed bankruptcy. Our lawyer said the HOA was so far down the list of creditors he doubted we would ever see dollar one. He also said there are ways of going after them but the time and cost was probably not warranted. His suggestion was to write it off and move on.

RichardP13 (California)
Posts: 3,868

Posted:

Something important to remember, bankruptcy eliminates unsecured, personal debt, a lien is against the PROPERTY, not the homeowner.

By not filing a lien PRIOR to the bankruptcy, eliminated any hope the HOA had against the old debt.

ChrisP5 (Missouri)
Posts: 165

Posted:

Also keep in mind not to write the debt off just because you receive notice that they have filed. We set that debt aside into a separate tracking line but keep it on the books until we receive a final judgement on the bankruptcy before writing it off. We have had more than one filed case not go all the way through the judgement process.

TimB4 (Tennessee)
Posts: 21,060

Posted:

Robyn,

It also depends on if the assessments were included with the bankruptcy and how they were included.

Did the individual claim the whole years worth or only what they owed to date of filing?
Has the Association filed a claim with the court to see if they can get any of the funds?
Has the debt been discharged or not?
Has the individual paid assessments (new debt) since the discharge?

These are things the Board needs to look into and, if they don't have the time, pay someone to look into. Just limit how much you will spend as it's likely you won't be fully reimbursed.

RobynH1 (South Carolina)
Posts: 39

Posted:

By moving on do you mean to file a lien on the property (they are still living in)
for new HOA dues now compounding past due.

They can't file again for 7 years can they? We cannot let them live dues free
for 7 years until next bankruptcy.

Somewhere I thought I read that at some point we can repossess the property??

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By RobynH1 on 01/14/2016 5:22 PM
By moving on do you mean to file a lien on the property (they are still living in)
for new HOA dues now compounding past due.

They can't file again for 7 years can they? We cannot let them live dues free
for 7 years until next bankruptcy.

Somewhere I thought I read that at some point we can repossess the property??

You can foreclose on unpaid dues that were not excused by the bankruptcy award. Pre-filing dues were probably wiped out by the bankruptcy. New dues that go unpaid are ripe for any kind of legal collection you choose.

Sikubali jukumu. Read all posts at your own risk.

TimB4 (Tennessee)
Posts: 21,060

Posted:

Quote:

Posted By RobynH1 on 01/14/2016 5:22 PM

Somewhere I thought I read that at some point we can repossess the property??

That is done by foreclosing on the lien.

Foreclosures laws vary by State and if your Association has never done one, it may be best to seek the advice of an attorney to ensure all procedures and notices are followed to the letter.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

We made a policy that 6 months behind on dues we lien. A year behind on dues, we CONSIDER foreclosure. The reason for this is that we are not "picking and choosing" out of the sky when we decide to collect. That makes it looks like selective enforcement. So my first step would be to establish this process FIRST and distribute that to ALL the owners.

Having such a policy would have avoided most of this situation. It takes around a year before the bank will consider foreclosure. You NEVER want to foreclose on property the bank is foreclosing on or is owned by ACTIVE military members. Each situation is unique and done on a case by case basis. I would have still filed a lien on them regardless of their bankruptcy. HOA liens may or not be included depending on the type of filing. Something should discuss with a bankruptcy lawyer.

Once you get a policy in place, then file the lien. Discuss this with a lawyer as well.

Former HOA President

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Robyn

In SC one can file a complaint in Magistrates Court if the owed amount is less then $7,500.00. Kind of like small claims court. It cost $80.00 to file a complaint. I am told it is best to have an Officer of the HOA do so. The hearing is in front of a single Magistrate Judge and rather informal like small claims court. If the defendant does not show or the court rules in the Plaintiffs (the HOA) favor, then a judgement is issued ordering the defendant to pay. If the defendant does not pay the Magistrate Court can then place a Judgement Lien via the Clerk of Courts. Thus a lien. I also belief they file an arrest warrant for failure to pay a judgement but in reality, no one enforces the warrant. I am overly simplifying this and not trying to play lawyer.

As said earlier, I expect your chances of collecting are zilch but also if one does not get in line, one gets nothing.

DouglasK1 (Florida)
Posts: 2,046

Posted:

Quote:

State laws may vary, but at least here in Florida an HOA can foreclose for unpaid assessments. I'll suggest that this is not a do-it-yourself project. If you have an association attorney, then you really need to discuss the options with them. If you don't have an attorney, it's time to find one. This might cost some money up front, but hopefully you can recoup that on the back end. Have you even recorded your lien against the property yet?

As JohnC mentioned, you could probably get a judgement, but collection is not a given.

Escaped former treasurer and director of a self managed association.

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