Bankruptcy and homeowner’s association dues and assessments

Many people in Minnesota live in town homes, condos, or subdivisions and have homeowner’s association dues every month, which they pay as part of their monthly outgoings.

This is money that the town home association, or condo association collects to take care of the maintenance of common areas.

This money is used for things like:

Landscaping
Elevator maintenance
Fixing the roof

These association dues can be very expensive, especially when there is a special assessment for something like fixing the main sewer.

What happens to those maintenance fees when you file bankruptcy?

The short answer is that:

The dues and assessments that arose before the bankruptcy get discharged by the bankruptcy

But:

The dues that arise after your file the bankruptcy survive and must be paid

However, the fees also become a lien against the house (whether they arose before or after the bankruptcy).

What does this mean?

This lien gives the association the right to foreclose on the house if the dues are not paid.

The lien only matters if you want to keep the house after the bankruptcy.

What happens if I file bankruptcy and want to give my house back to the lender?

This is the situation where you have to be careful, because you continue to own the house until 6 months after the sheriff’s sale, when the redemption period ends.

How does that affect me?

You still owe any association fees that arise until the end of the redemption period.

What should you do?

In order to make sure that you don’t owe lots of association fees or assessments, it is best to:

Wait for the lender to foreclose, and then file the bankruptcy at the end of the redemption period

This means that we file your Chapter 7 bankruptcy or Chapter 13 bankruptcy at the last moment before the house goes back to the lender, so that the lender will take care of any new association fees.

As you know, assessments can be very high.

You don’t want to take the risk of being charged a huge bill right after you file for bankruptcy which could hurt your chances for a fresh financial start.

After all, that was the whole reason to file for bankruptcy in the first place.

Conclusion

If you’re thinking about filing for bankruptcy in Minnesota, and worried about homeowner’s association dues and assessments, then why not speak to us?