Living in a community with a homeowners association (HOA) results in paying a monthly fee to this organization, and failing to pay this fee could result in losing your home. If you are going through a difficult time financially and are behind on your HOA fees and other bills, you be considering filing bankruptcy. Before you file, you may want to find out the effects this would have on keeping your house and the past-due fees you owe.
Risk of Doing Nothing
When you buy a house in a community like this, you will become part of the HOA whether you want to or not. You will be required to sign an agreement with the HOA, and this agreement contains all the rules and regulations of being part of this community.
A common rule and right of an HOA is that it can foreclose on your home if you are behind on HOA fees. The first step the HOA typically takes with this is filing a lien against your home. If you do not pay your full balance, the HOA may proceed with foreclosing on the house. If the foreclosure goes through, you will lose your house and any equity you have in it.
If you cannot afford to pay your entire past-due balance and if you are past-due on other debts, you may want to talk to a bankruptcy lawyer to find out if bankruptcy would be helpful for you. To determine if bankruptcy is a good option, the lawyer will probably ask you whether you want to keep your home or if you are willing to let it go. The answer to this may play a big role in the type of bankruptcy the lawyer suggests, and here are the two options you will have:
- Chapter 7 – This option is good if you want to get rid of the house. With Chapter 7, all past-due HOA fees will be forgiven and you will owe nothing. You can also use this option if you want to keep the house; however, you will have to pay all HOA fees that accrue after the date of filing for bankruptcy.
- Chapter 13 – If you definitely want to keep your house, this might be the safer route to take. You can keep the house with Chapter 13, but you will have to repay the past-due fees. You may not have to pay 100% of them, but the fees will be worked into your repayment plan. If you owe more on your house than it is worth, the court might forgive the past-due HOA fees.
If you currently have a lien on your home and want to avoid foreclosure, make an appointment with a bankruptcy lawyer to find out what your rights and options are. To learn more, contact a professional like Donna C Crooks Atty At Law for more help in deciding what would work best for your situation.