Can I Wipe Out Homeowners Assocation Fees in Chapter 7?

Any homeowners association fees that have accrued prior to the filing of the Chapter 7 can be wiped out.  The problem is when a mortgage company refuses to foreclose on a house after we surrender it in a Chapter 7 bankruptcy.  Post-petition homeowners association fees (fees that become due after the Chapter 7 is filed) that become due after a Motion for Relief or a discharge is granted ARE NOT dischargeable in a Chapter 7 bankruptcy.  Sometimes a person might be better off living in the house and waiting to file Chapter 7 until the mortgage company completes the foreclosure process.  The reason for this is the mortgage company would then be liable for any future homeowners association fees.

The related Bankruptcy Code Section regarding homeowners association fees is 523(a)(16).  The section states in part,

“(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt – ………..

(16) for a fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor’s interest in a unit that has condominium ownership, in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest in such unit, such corporation, or such lot, 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.”

Nothing in this post should be interpreted as legal advice.  There is no attorney client relationship until you and I have a written contract.

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