On behalf of Bigge & Rodriguez, PA posted in Chapter 13 on Friday April 24, 2015.
Individuals filing Chapter 13 frequently own homes that are “underwater.” In other words, the payoff on the first mortgage is more than the actual value of the home.
Often a homeowner falls behind in the monthly homeowners association payments as well. To add insult to injury, the HOA attorney’s fees and costs can actually exceed the sum the individual owes in association fees.
When the value of the home is less than the payoff on the mortgage, the arrearage owed to the HOA, including past due payments and attorneys fees plus interest, may be stripped in a Chapter 13 Bankruptcy. The Debtor can merely pay the ongoing regular HOA payments and discharge the arrears including all fees and late charges.
However, there is a growing trend in the case law that holds that the lien strip of the HOA arrearage is only effective for the Homeowner that filed Bankruptcy. The lien strip may not be enforceable for a new buyer of the home should the debtor sell the home.
This trend should be taken into account for Debtors filing in the Southern District of Florida, but not all Judges in the district follow this trend. If residing outside of this district, consult a bankruptcy attorney that is familiar with the case law that pertains to the district of the residence and/or filing.
For the tri-county area of South Florida, contact Fort Lauderdale Bankruptcy Attorney Bigge & Rodriguez at 954-400-7322 .