Bankruptcy law creates a court order forgiving most debts. Discharge (forgiveness) of homeowners association dues related to California property is governed by a combination of bankruptcy law and California law. Generally, past due HOA dues are dischargeable in either chapter 7 or chapter 13 but only as to dues owed on the bankruptcy filing date. Dues that come due after bankruptcy are owed by the owner of the property, meaning it’s a good idea either sell the property or let it foreclose before filing bankruptcy to avoid being the owner after bankruptcy and owing post-bankruptcy dues. Sounds simple enough, right? I said generally, and unfortunately an HOA can file a lien which alters the result in many cases.
In order to address the impact of an HOA lien, I will first discuss liens in general. A lien is a document giving the lienholder rights to your property which can survive bankruptcy. Car loans are a common example of a lien. The auto lender is entitled to repossess the car if the contractual payments are not made but is required to comply with the procedural requirements of California law. Car loans survive bankruptcy unless the car is returned to the lender. Conversely, a person can file bankruptcy and retain a car by continuing to make payments after bankruptcy. An HOA can record a lien without the owner’s consent if HOA dues become delinquent. Enforcement of an HOA lien is governed by California’s foreclosure laws. Yes, your HOA has the power to foreclose!
Now back to bankruptcy. In chapter 7 (full bankruptcy) an HOA lien filed before bankruptcy will remain after bankruptcy, meaning the HOA dues will need to be paid at some point. In some chapter 13 (reorganization) cases, an HOA lien can be given special priority and paid in full while other debts are paid pennies on the dollar. In other chapter 13 cases, the HOA lien can be removed from the title without payment in full. If you owe delinquent homeowners dues, bankruptcy provides powerful rights to help you deal with the problem.
At the Law Office of Michael Primus we have helped thousands of clients get out of debt, stop wage garnishments, and start fresh through bankruptcy. If you live in Contra Costa, Alameda or Solano counties and have debt problems, contact us for a free in-office consultation. We have offices in Walnut Creek, Antioch, and Hercules.
References: Cal. Civ. Code 5650, 5675, 5680 & Bankruptcy Code 523(a)(16), 1328(a).
Nowadays most people do some research on bankruptcy before making an appointment to talk to a lawyer. One common concern is the education requirements for bankruptcy. People are required to complete an approved course on credit counseling and a second course on financial management. The courses are specifically for bankruptcy and must be taken from an approved provider. Fortunately, there are many approved providers online, the cost is nominal ($15 to $20) and providers offer fee waivers to low income individuals. I suggest www.accessbk.org for people that ask. Naturally, people wonder if the courses are long or difficult and if there is a test they need to pass. The short answer is no, you do not need to a pass test but there is a mandatory online chat session at the end of each course. Here is a general description of the courses.
According to a recent study by the American Psychological Association, money and finances have remained a leading cause of stress for the past decade regardless of the economic climate. Lower income households (below $50,000) experience higher stress levels than higher income (above $50,000) households. Stress can be good, and most of us need some level of stress to feel useful and valuable. I know the stress of a work deadline or an athletic competition motivates me. Motivation is great, but according to the study too much stress can alter the brain’s chemicals and lead to depression particularly in susceptible people.
Small business is the backbone of our economy. In 2014, according to U.S. Census Bureau data, firms with less than 20 employees made up 89% of all businesses and employed nearly half of the U.S. workforce. Small businesses operate in a myriad of industries and are as diverse as the customers they serve. Despite their diversity, small businesses share many common elements. From customer service to accounts receivable t0 personnel, a small business owner wears many hats. Most business owners start with industry skill and work to develop business acumen. Even a veteran small business owner will need to make quick decisions with limited and imperfect information – essentially an educated guess. Will a particular ad produce? Will a potential employee become a company leader? With so many risks, things are bound to go wrong. Usually the business can survive and even thrive when most things go well but what happens when several things go sour at once? Business reorganization can be the solution.