《楊清泉律師專欄》TREATMENT OF HOMEOWNER ASSOCIATION FEES IN BANKRUPTCY (Part II)
楊清泉律師事務所
《楊清泉律師專欄》TREATMENT OF HOMEOWNER ASSOCIATION FEES IN BANKRUPTCY (Part I)
In Re Pigg, the court ordered a Chapter 7 trustee to sell the debtor’s condominium unit, which was severely damaged by flooding in May 2010. The court acted at the request of the debtor, who faced mounting post-filing HOA fees so long as the secured creditor refused to foreclose even though debtor had to abandon her home prior to filing for bankruptcy.
“Congress’ broadening of Section 523(a)(16), no doubt he result of some special interest lobbying, could not have foreseen the world and United States financial crisis that crashed Wall Street, sunk the real estate market, and affected, to some degree, almost every American. With the real estate collapse, lenders, who otherwise have the right to do so, are choosing not to foreclose on their collateral leaving homeowners in limbo. In the case of a Chapter 7 debtor who has surrendered her home in bankruptcy and been relieved of any personal liability on the mortgage, she cannot truly be given a fresh start because HOA fees are still accumulating until a lender chooses to foreclose...[sad violin music in the background.] If the lender never forecloses, that homeowner’s liability for the HOA fees continues in perpetuity. Congress’ broadening of Section 523(a)(a6) to protect the goals of HOAs deprives the debtor of a fresh start, and thwarts the goals of the entire Bankruptcy Code. If that situation were not dire enough, it is made worse by Mother Nature,” (the old blame the mother justification), the court said.
The bank agreed with the HOA argument that the fees were not dischargeable but it also argued that the Bankruptcy Code did not require it to foreclose. The law is harsh but clear, the bank said.
The court ordered the Chapter 7 trustee to sell the property pursuant to Section 363.
Lawrence Bautista Yang is a graduate of Georgetown University Law Center and has been in law practice for thirty years. He specializes in bankruptcy, business and civil litigation and has handled more than five thousand successful bankruptcy cases in California. He speaks Mandarin and Fujien and looks forward to discussing your case with you personally. Please call (626) 284-1142 for an appointment at 1000 S Fremont Ave Bldg A-1 Suite 1125 Unit 58 Alhambra, CA 91803.
In Re Pigg, the court ordered a Chapter 7 trustee to sell the debtor’s condominium unit, which was severely damaged by flooding in May 2010. The court acted at the request of the debtor, who faced mounting post-filing HOA fees so long as the secured creditor refused to foreclose even though debtor had to abandon her home prior to filing for bankruptcy.
“Congress’ broadening of Section 523(a)(16), no doubt he result of some special interest lobbying, could not have foreseen the world and United States financial crisis that crashed Wall Street, sunk the real estate market, and affected, to some degree, almost every American. With the real estate collapse, lenders, who otherwise have the right to do so, are choosing not to foreclose on their collateral leaving homeowners in limbo. In the case of a Chapter 7 debtor who has surrendered her home in bankruptcy and been relieved of any personal liability on the mortgage, she cannot truly be given a fresh start because HOA fees are still accumulating until a lender chooses to foreclose...[sad violin music in the background.] If the lender never forecloses, that homeowner’s liability for the HOA fees continues in perpetuity. Congress’ broadening of Section 523(a)(a6) to protect the goals of HOAs deprives the debtor of a fresh start, and thwarts the goals of the entire Bankruptcy Code. If that situation were not dire enough, it is made worse by Mother Nature,” (the old blame the mother justification), the court said.
The bank agreed with the HOA argument that the fees were not dischargeable but it also argued that the Bankruptcy Code did not require it to foreclose. The law is harsh but clear, the bank said.
The court ordered the Chapter 7 trustee to sell the property pursuant to Section 363.
Lawrence Bautista Yang is a graduate of Georgetown University Law Center and has been in law practice for thirty years. He specializes in bankruptcy, business and civil litigation and has handled more than five thousand successful bankruptcy cases in California. He speaks Mandarin and Fujien and looks forward to discussing your case with you personally. Please call (626) 284-1142 for an appointment at 1000 S Fremont Ave Bldg A-1 Suite 1125 Unit 58 Alhambra, CA 91803.
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