Do I Still Need to Pay My Condominium Fees After They Have Been Surrendered in Bankruptcy?
Although your Condo Association fees can be discharged in bankruptcy, particular types of Condo Association fees cannot be eliminated through bankruptcy. You can have your past-due Condo Association dues discharged in bankruptcy, but you have to still pay for current dues and fees that have been accumulated since you filed for bankruptcy. In this blog, we explain why certain condo fees can’t be discharged if you file for bankruptcy.
The ability to discharge condo fees through bankruptcy can be very confusing to consumers and even attorneys unfamiliar with this issue. Generally, any fees owed prior to filing the bankruptcy are dischargeable, while post-filing fees may not. If you continue to legally own the property after you file the bankruptcy, you also will continue to owe the condominium fees. Even when you state your intent to surrender the property in the bankruptcy, you still technically own it until the property has been foreclosed, or until the title is transferred or sold to another person or entity. The slow processing of mortgage-holding banks when it comes to foreclosing on condominium properties contributes to the difficulty, as it may be years before they finally decide to foreclosure; and you remain the owner and liable for the condo fees.
However, if you want to keep your condominium, you may be able to discharge past-due fees and keep the property, so long as a lien has not been filed by the Condominium Association. If a lien has been filed, the debt is discharged, but the Condominium Association may still foreclose upon the property. Post-petition fees would need to be paid whether your intent is to keep or surrender the property. Unfortunately, new Homeowners’ Association and Condo Association dues continue to accumulate after your bankruptcy filing. This means you may still be liable for post-petition fees due for your condominium after you file a Chapter 7 bankruptcy.
The dues and fees that you owe before filing for bankruptcy will be treated like any other type of unsecured debt. This is because there is no exception to discharge for pre-petition condo dues in the Bankruptcy Code. As long as your bankruptcy is filed before the Condo Association or Homeowners’ Association records a lien on your property, your past due fees will be wiped out without a threat of foreclosure due to the past due fees.
If a lien is filed against your property, it will be treated like any other type of lien in bankruptcy. In a Chapter 13 bankruptcy, you may be able to file a motion to avoid a lien of the Condo Association, in order to have your past due condominium fees become dischargeable general unsecured debts. This may depend on the value of your property and the indebtedness to the first mortgagee. But remember, this can’t be done in a Chapter 7 bankruptcy. If your home has a lien when you go to file your chapter 7 petition, you will eventually have to pay off past due amounts secured by the lien, otherwise your property is subject to foreclosure.
Do you have more questions about discharging your debts through bankruptcy? We can help. At Richard A. Heller, P.A. we have more than 75 years of combined legal experience. Our team of skilled lawyers are familiar with all types of bankruptcy cases and we can help you determine a legal strategy that is right for you. Contact our Orlando team of bankruptcy attorneys to schedule a free case evaluation today.