What happens to delinquent HOA dues after bankruptcy? Under the law, you still owe all the hoa dues after bankruptcy that comes due between the date you file bankruptcy, and the date that you no longer owe the property. This should not be a problem to someone who is still paying for their property. But, it is a big problem to someone who wants to surrender the property. It is a problem especially if you don’t know what happens to delinquent HOA dues after bankruptcy.
The Los Angeles Times ran a story involving a Los Angeles bankruptcy case involving foreclosure, and one man’s personal financial train wreck. You can read about it here. (Also, I am quoted in the article.)
I see this kind of financial train wrecks all the time. People file bankruptcy without a lawyer, and the case turns into a nightmare. There are some important lessons to learn from that man’s tale of woe. Let me explain some things that might save you from making similar mistakes.
HEADLINE: Man Files Los Angeles Bankruptcy Case Without an Attorney. Troubles go From bad to Worse when HOA sues him for HOA Dues After Bankruptcy. Meantime, a Squatter takes over the empty condo; The HOA lawsuit seeks $32,000 in dues.
The facts are simple: A man gets divorced and files bankruptcy in Los Angeles. He doesn’t have a bankruptcy lawyer. Also, he obviously does not follow correct legal advice. He vacated his condo, expecting Bank of America to foreclose. He also quit paying his HOA dues and property taxes. After he moved out, a squatter moved in. The squatter made himself at home in the condo for 2 years. I was quoted in the L.A. Times article, (fourth paragraph from the end), which says, “I’ve had many clients who’ve been living rent-free in their condos for 12 to 24 months,” said Leon Bayer, a Los Angeles bankruptcy attorney“.
Who wouldn’t like 2 years of free rent?
Here is the number one mistake: The owner moved out. He wound up living with a relative because he had nowhere else to go. He didn’t know it, but he should have stayed put in his own condo. The bank had not yet foreclosed. The guy might have had 2 years of rent free living in his own property, without having to pay the bank. (But, he would still be liable under the law to pay the hoa dues.)
Here is the number two mistake: He did not know that he would continue to be liable for all HOA dues after the date of his bankruptcy filing. This poor guy is now facing a lawsuit from the HOA. The hoa is seeking $35,000 of delinquent dues from him. He should have known that his bankruptcy will not protect him from this. But he was not correctly advised. Remember, he filed on his own, without a lawyer. You can read more about that HERE, in one of my ASK LEON columns on the Nolo Press web site.
What was the best advice?
The correct advice would be to live mortgage free in his unit, BUT continue to pay the HOA up until the date that the bank finally forecloses.
The poor guy has wound up in a court fight with the squatter. he is also in a court fight with the HOA. He has a looming foreclosure sale. And he has nowhere else to live except with a family member who took him in.
If you decide to file a bankruptcy case acting as your own lawyer, this could be YOU we’re talking about.
Bayer, Wishman & Leotta is a Los Angeles Bankruptcy law firm. We have offices in Downtown Los Angeles, the San Fernando Valley and Long Beach. Our bankruptcy attorneys are Specialists in consumer and small business bankruptcy and you may reach us at (800) 477-3111. Check us out on AllExperts.com.
Synopsis: What happens to delinquent HOA dues after bankruptcy? Under the law, you still owe all the hoa dues after bankruptcy that comes due between the date you file bankruptcy, and the date that you no longer owe the property.
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