December 2013

02 Dec Chapter 13 Bankruptcy And Home Owners Associations

abandoned homeIn Florida, home owners associations (HOAs) can be a blessing for some and a problem for others. When you add a Chapter 13 bankruptcy into the mix, the HOA can become a legal nightmare. According to the recent case of In Re Rosa, the chapter 13 plan and the confirmation order could change the relationship between the two. Imagine that you retired, purchased a beautiful home in a gated community in order to live the stress free life. The HOA now takes care of the lawn, cable, pest control, etc. Well, life changes or the economy changes or you have medical bills or there is a loss of job and you are forced to file bankruptcy. You have to make a choice: either keep the home and the HOA or let it go and deal with the HOA. If you file a chapter 13 bankruptcy petition and schedules, you also have to file your plan of reorganization. Your chapter 13 plan must tell the secured creditor exactly how you are going to deal with their collateral. Well, if you are going to keep the home, it really isn't a problem because you are still obligated to pay the HOA. If your Chapter 13 plan states that you are going to surrender the collateral back to the mortgage holder, that is good news to the secured creditors, but what about the ongoing HOA obligation? In other words, is the chapter 13 debtor still obligated to pay the ongoing HOA dues even though he or she has expressed their intention to surrender the property.
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