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Bankruptcy Law/HOA fees after Bankruptcy where bank took 18 months to take posetion.

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Expert: - 10/20/2010


Question
When I filed bankruptcy on August 2007, my acct. with the HOA was paid and current. I was told by my attorney not to pay any more dues, that I was protected under the laws even though they were part of the debtors, it took 18 months after my bankruptcy to the bank (listed debtor) to take possession of the property and now the HOA wants me to pay them those late months ($24,000), Am I responsible?, Can I sue the bank? I can't afford to pay this amount of money now nor in the distance future. This hole in the bankruptcy law related with the HOAs is giving me so much stress that I haven't been able sleep lately and is deteriorating my health. Please tell me what can be done.

Answer

Leon Bayer
Dear Ali,

I am sorry to hear about your situation. The bankruptcy law was amended effective October 17, 2005 to provide that HOA fees accrued AFTER the date of a bankruptcy filing are still due and collectable.

A lawyer handling someone's bankruptcy case should advise a client of this fact and discussed the option of perhaps filing bankruptcy AFTER the bank has completed a foreclosure sale. Filing BK after the date of the foreclosure sale would allow a discharge of the accrued HOA fees.

You can demand an itemized accounting from them. After you get that, you can divide the bill into fees accrued prior to the BK, (which are dischargeable) from fees accruing after the filing date, which are not dischargeable. I strongly suspect the $24,000 includes fees accrued prior to filing, as well as after.

At this point you might have some recourse against your attorney. I assume you would have continued to pay your HOA if you had been correctly advised. However, if there was some urgency to filing, than perhaps delaying until after the foreclosure sale was never a serious option. Either way, you should have been told of your liability to the HOA. Also, the BK may have contributed to the long time period that it took the bank to complete a foreclosure.

Looking at this another way, you picked up 18 months of free rent, by living there without having to pay the mortgage. The HOA fees should be viewed as a cost that really covers providing you with upkeep and amenities you need to have as a resident. The alternative to having an active HOA might have meant living for those 18 months surrounded by garbage that is never hauled away, getting mugged in the parking lot, infestations of vermin living in the garbage, living surrounded by dead vegetation, and having green mosquito infested water in the swimming pool.

In any event, it would have been nice to know your options before you filed, so that you could decide for yourself. Once you determine how much of that $24,000 was incurred during the 18 months, perhaps you can either settle with them for something reasonable, or take a chance that perhaps they won't pursue it any further if you ignore them.  

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.

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