Getting behind on condominium fees or having and HOA delinquency can snowball into a larger debt than you can handle. It may make you wonder if it is even worth keeping your condo based on the new liability.
The good news is that there is a solution! Our firm can assist you in filing a Chapter 13 plan to resolve your past-due HOA dues in addition to getting your overall budget back on track and in balance.
How can You Legally Remove HOA Delinquency?
Past due association fees that have accrued as of the date of the filing of a bankruptcy petition constitute a statutory lien on the property. In general, this lien has to be paid in full.
However, if the balance on the 1st mortgage exceeds the market value of the home, a Chapter 13 plan can be used to “strip” or remove the lien and convert the debt to an unsecured claim (and potentially eliminate the debt). Unsecured claims generally get paid a nominal dividend in Chapter 13 Plan vs. the full payment they would otherwise receive.
Upon the filing of the Chapter 13, an adversary proceeding (lawsuit) is commenced against the condo association for the purposes of establishing the value of the property and a court order is entered deeming their claim unsecured. At the completion of the case (the Chapter 13 discharge) the debtor has a recordable instrument that releases the Association lien.
Other Benefits of Filing Chapter 13 Bankruptcy:
The Chapter 13 reorganization plan provides many distinct benefits, including:
- 0% interest repayment on unsecured debts, such as credit card or medical bills;
- Creditor protection from actions such as foreclosure, repossession, garnishment or collections and harassment;
- Providing a balanced budget by reducing or deferring debts you cannot afford to pay in full. All remaining balances on unsecured debts are legally eliminated at the completion of the 36 – 60 month program;
- Debt reduction through lien stripping, adjusting vehicle loan payments, interest elimination on unsecured debt, etc.
Read other information regarding condominiums and HOAs:
Long Term Financial Stability
Getting behind on bills, especially HOA dues, creates stress and uncertainty. We are a helping hand to Michigan families and have solutions for long term financial success by employing:
- Chapter 13 Debt Consolidation Plan;
- Chapter 7 Bankruptcy or;
- Non-bankruptcy Debt Settlement.
Call today at 866-261-8282 for a free consultation with a licensed Michigan attorney to discuss your options for debt resolution.