Are HOA fees discharged under bankruptcy?
Chapter 7 versus Chapter 11 Part of the determination of whether or not all your debt will be discharged under bankruptcy is whether you are allowed to file a Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is what people typically think of when they think of bankruptcy. Under Chapter 7, unsecured debt will be discharged. However, if you fail an income means test, you could be forced to move through a Chapter 13 process instead. This will involve your debt being reorganized in a manner the court believes will be easier for you to pay off. You will still be paying off a lot of your debt.
HOA collections You may also wonder if certain kinds of accumulated debt can be discharged under any bankruptcy process. For example, you may owe money to your local Home Owners Association. If this is the case, you may be afraid you’ll lose your home. Under a Chapter 7 bankruptcy, your home will not be protected because while the fees can be discharged, the foreclosure cannot be stopped. Under Chapter 13, your home will be protected, but you will have to continue paying back the fees in a reorganized manner.
Secured debt versus unsecured debt You should also know that other kinds of debt can’t be discharged. Secured debt, for which you have pledged collateral, might not be dischargeable. Examples of secured debt include:
secured credit cards
life insurance loans
some poor credit loans Overall, you should be aware that you may have trouble discharging certain kinds of debt, such as HOA fees, under any bankruptcy process. Make sure to do your research before filing. The bankruptcy may not end up doing what you think it will.