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What Happens to My Homeowner’s Association Debts in Bankruptcy?

Posted by Cha'Ron Ballard on November 11, 2019

HOA & Bankruptcy

HOA & Bankruptcy

Worrying about what can happen to your home is often at the top of the list when you are going through a financial crisis. You may feel fear that you will lose your home if you fall behind on payments—this fear can be compounded if you miss your homeowner’s association (HOA) payments as well. If you have missed HOA payments due to difficult financial circumstances but want to keep your home, you may want to see how filing for a Georgia bankruptcy can help.

HOA Debts and HOA Liens

The purpose of an HOA is to make an enforce rules for a particular subdivision or residential area. There are often perks of having an HOA such as having certain services or amenities in the community. However, there are generally fees involved. When you fail to pay these fees and become indebted to your HOA, your home can be put at risk.

Getting behind on your HOA payments is particularly dangerous because when you miss a payment, the HOA immediately gets to create an HOA lien against your house. When this occurs, the HOA holds a lien against your home for the same value as your debt. For every payment that you miss, the value of the lien will increase. Liens against your home are always dangerous as it could ultimately result in foreclosure.

How Bankruptcy Can Help

 Filing for a Georgia bankruptcy may be able to help when it comes to dealing with your HOA debts. How it can impact HOA debts depends on which type of bankruptcy you choose to file, a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.

  • Chapter 7 Bankruptcy: A Chapter 7 bankruptcy is also referred to as a liquidation bankruptcy. In a Chapter 7, your assets are liquidated to pay back your debts. This means that if you already have HOA debt at the time of filing, those debts will be discharged. However, if you choose to keep your home, you must stay current on your HOA payments from the time of filing as those debts will not be discharged. A chapter 7 bankruptcy can help by eliminating other debts so you can focus available funds to paying your HOA fees and protecting your home.
  • Chapter 13 Bankruptcy: In a Chapter 13 bankruptcy a debt repayment plan is created. Through the repayment plan, part or all of each of your debts is repaid over a period of 3-5 years. While you will still need to stay current on HOA fees after filing, any HOA debt accrued before filing will become part of the plan and be paid off over the plan period. This can give you more time to repay your debts and diminish stress you may feel about losing your home.

Get Answers to Your Bankruptcy Questions

Understanding how bankruptcy impacts debts involving your home such as HOA liens and mortgages can be complicated and confusing. Still, if you find yourself in a serious financial crisis, bankruptcy is an option to consider if you are trying to keep your home. To get your questions about bankruptcy answered and see if it is the right option for your situation, call the skilled Georgia bankruptcy attorneys at the Ballard Law Group at 404-220-9906 to schedule a free case consultation today!

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