Castle Law Office Blog | Missouri & Illinois Bankruptcy Legal Blog

Can Homeowners Association Dues be Discharged?

I typically have a lot of people come into the office that own condominiums with homeowners association dues along with it.  Many of these folks have the same question, which is:

We live in a townhome development and over the past several years, the homeowners association fees have risen almost 20 percent per year. I lost my job earlier in the year and we have fallen three months behind on our HOA dues. If we file for bankruptcy, can we still be forced to pay our missed dues or have a lien filed against our home by the HOA if we don’t?

The answer is dependant upon a number of factors, including the date you are considering filing for bankruptcy and steps already taken by the HOA to collect your delinquent payments.The federal Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), or the New Bankruptcy Law, which went into effect nearly three years ago, seriously tightened federal bankruptcy laws. Though qualifying for a bankruptcy filing has been made much more difficult by the law, it also addresses specific rights and obligations of both a homeowner and an HOA when a bankrupt owner is in arrears on the monthly HOA dues.  A debt owed to an HOA can be treated differently depending on whether you file a Chapter 13 bankruptcy or a Chapter 7 bankruptcy case.

If a lien has yet to be placed on your property, the act allows for a bankruptcy judge to discharge some or all of the dues and special assessments you were unable to pay before your filing date. In some states, a lien on the property is automatic based on current state laws, so the HOA does not have to do anything to make sure the lien is on the property.  However, any dues or assessments levied after filing generally cannot be discharged.

If a lien has already been placed on your home, then the lien will have to be addressed in your bankruptcy case or the HOA can usually go forward with foreclosure.  Federal bankruptcy laws can be complex and it would be wise for you to consult an experienced bankruptcy attorney.

St. Louis bankruptcy attorney James Brown with Castle Law Group has been helping victims of foreclosure to save their homes for over 15 years.  To find out if this is an option for you, request our free book "7 Critical Mistakes To Avoid The Dismissal Of Your Bankruptcy Case" or call for a free consultation at 1-866-570-8484.  Castle Law Office helps families in St. Louis, Missouri and Illinois.