Home Owners Association dues can be a real pain in bankruptcy. Reason being, HOA dues are an ongoing, recurring expense. As such, HOA dues that come due after the homeowner files bankruptcy are still the responsibility of the homeowner. Allow me to explain.

A common scenario: Don Debtor is unable to afford his home and is allowing it to go into foreclosure. But Don also has other debts and is facing lawsuits and potential garnishments. Don got smart fast and did not agonize over the decision to file bankruptcy; he knows bankruptcy will be his ticket to debt freedom and future financial security. The problem: the foreclosure process takes many months; in Colorado, the average foreclosure takes about 9 months to complete (from the month of your first missed payment). Don’s home has a monthly HOA payment of $200 per month and he stopped paying the HOA along with his mortgage; he simply cannot afford to pay since he lost his job and is receiving only unemployment, plus he has no intention to keep the house anyway. (more…)