HOA Assessments and Bankruptcy
Many newer homes in the Phoenix, Arizona area are located in a neighborhood that is governed by a Homeowner’s or Community Association. They are commonly referred to as HOAs. You know the ones who send you nasty letters that your grass is a half-inch too long and that you will be fined if you don’t have it manicured very soon.
So you’ve filed bankruptcy and think that your obligation to your HOA has ended. Not so fast! The Bankruptcy Code, at 11 U.S.C. § 523(a)16, indicates that any assessments that come due after the order for relief are not dischargeable under most discharge sections of the Bankruptcy Code. The order for relief happens immediately upon the filing of an involuntary Bankruptcy case.
However, at least two courts have determined if you are surrendering your house to the mortgage company AND you receive a discharge under section 1328(a) of the bankruptcy code your obligation to your HOA may be discharged in a Chapter 13 Bankruptcy.
In Re Colon, Bankr. Court, D. Utah (2011);
In Re Kelly, Bankr. Court N. D. Cal (2010). Section 1328(a) requires a debtor to make all payments under the Chapter 13 Plan.
In Phoenix, Arizona, if you intend to keep your home and you have filed bankruptcy, you must pay your HOA dues that come due after you file your bankruptcy. This is true regardless of the Chapter you file under.
Even if you are surrendering your home to the mortgage company, you must pay the HOA dues that come due after you file bankruptcy until your mortgage company forecloses on your home AND you move out. The only exception may be in the event that you elect to surrender your home AND you receive a discharge under 11 U.S.C § 1328(a).
If you are unsure about where you stand, consult an attorney who is knowledgeable. Whether you live in Avondale, Litchfield, Buckeye, Peoria, Glendale, Phoenix or any other city in Arizona, Wright Law Offices can help you through your bankruptcy.