What Happens to HOA Dues in Chapter 7 Bankruptcy?

Find out when you're on the hook for homeowners association (HOA) dues when you file for Chapter 7 bankruptcy.

In general, whether you will be responsible for paying homeowners association (HOA) dues after filing for Chapter 7 bankruptcy will depend on:

  • when you file your case
  • whether you are surrendering (giving up) the property, and
  • when the foreclosure sale takes place.

What Happens to HOA Dues if You Want to Keep Your House?

If you wish to keep your house, you should continue paying all of your HOA dues including any amounts you were behind on when you filed for bankruptcy.

Even though you can discharge your personal liability for any HOA dues owed prior to your filing date, the HOA will typically still have a lien on your home. This means that it can foreclose on your home if you fail to pay your arrearages. (This is similar to how your mortgage is treated in bankruptcy.)

To learn more about what happens to your home in bankruptcy, see our topic area on  Your Home in Bankruptcy.

Are HOA Dues Discharged if You Surrender Your Property in Bankruptcy?

If you surrender your house in your Chapter 7 bankruptcy, your discharge will eliminate your personal liability for any unpaid HOA fees that have come due as of your filing date. But it will not wipe out any dues that accrue after you file your case. This means that you are on the hook for any HOA fees that come due after your filing date until your house is sold at a foreclosure sale and you are no longer the legal owner of the property.

Unless the outstanding HOA dues are paid off through the foreclosure sale, the HOA can come after you to collect any unpaid dues that have accrued after you filed for Chapter 7 bankruptcy (even if you have already surrendered the house). Unfortunately, many homeowners find this out by way of a lawsuit filed long after they have moved out of the property.

How Can You Avoid Liability for HOA Dues After Bankruptcy?

If you want to avoid any potential liability for outstanding HOA dues after filing for bankruptcy, consider:

  • selling your house as a short sale prior to filing for bankruptcy
  • negotiating with the HOA to waive any fees that come due after you surrender the property, or
  • waiting to file your bankruptcy case until your mortgage lender or HOA has already foreclosed on the property.

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