You are here:

Bankruptcy Law/HOA after bankruptcy discharge

Advertisement

Expert: - 6/20/2008


Question
When I filed bankruptcy Dec 2007, my acct. with the HOA was paid and current. I was told by my attorney not to pay any more dues, that I am protected under the laws even though they were not part of the debtors. Am I responsible even though I'm in default and will forfeit the home?

Answer
This is a very good question, and the law that governs this is very strange, indeed!

First of all, I certainly hope the HOA was listed as a creditor. I think it is wise to do so, even if the account was up to date.

Under the law, a person surrendering a condominium may discharge in bankruptcy whatever that person owes an HOA that arose BEFORE the date that they filed bankruptcy. However, the same law also says that person is indeed responsible to pay all HOA fees and assessments that come due AFTER the filing date of the bankruptcy, up until the time that person or the bankruptcy trustee no longer has legal, equitable, or possessory ownership of the unit.

In other words, the person who files bankruptcy will legally owe the money that accrues from the date that person filed bankruptcy up until the time that the foreclosure sale takes place and that person is no longer the legal owner, and provided that person, (or any tenant of that person) has moved out of the unit.

A person in this situation should ask their lawyer to explain why he or she appears to be unfamiliar with the provisions of Bankruptcy Code 523(a)(16), which is the applicable portion of the Bankruptcy Code. It is not a complex law, it is not a new law, and any lawyer practicing in the field of consumer bankruptcy has a duty to be aware of it when advising a client who will be surrendering a condominium.   

It is always possible that the HOA won't come after such a person for the money that has accrued. There is always hope that they won't. However, the HOA would have every legal right to do so as far as the bankruptcy law is concerned.

The next question in my mind is whether such advice, if given by a lawyer in this circumstance is malpractice. In my opinion, such advice would be clearly wrong, and it is malpractice for a lawyer in these circumstances to have given that advice to a person is the circumstances that you have described.

If the correct advice had been given, the owner of the unit could have paid the money right along without incurring liability for late fees, collection costs, further credit damage, etc. However, whether the person pays all of the money right now, or whether it got paid as things had gone along, the amount would probably have been the same, except for that possible liability for any late fees or collection costs, etc. Under these circumstances, I think it is only right and fair that the lawyer should have to pay for any late fees and collection costs.

Bankruptcy Law

All Answers

Answers by Expert:

Ask Experts

Volunteer

Los Angeles Bankruptcy Lawyer Leon D. Bayer

Expertise

Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.


Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.

©2012 About.com, a part of The New York Times Company. All rights reserved.