How to Improve Your Credit Score After Bankruptcy-Part 7

Handling Home Owner Associations After Bankruptcy

1. If you surrender real estate: Homeowner’s association debts are dischargeable in bankruptcy but only what was due on the date you filed. Homeowner Association dues that accrue after the bankruptcy and while you still own the property are current debt and you still owe it. That means if you don’t pay it you can be sued, the debt can be turned over to a collection agency or attorney for collection, and it can be reported as a delinquent debt to the credit bureaus.
2. Delays in Foreclosure: Mortgage companies don’t have any timetable they have to follow in foreclosing. They often will take months, if not years to foreclose. This puts the debtor is a bind because if he doesn’t pay the monthly dues he can be subjected to collection letters, phone calls, municipal fines, diminished credit, and even litigation and there is nothing he can do about other than pay the debt.
3. If you fee like gambling: You can ignore the homeowner's dues if you are willing to take the risk. Often times when the foreclosure finally happens the delinquent homeowner's dues are paid by the lender to clear the title to the real estate. This takes the debtor off the hook, but there is no guarantee this will happen and until the foreclosure actually takes place all the aforementioned collection horrors may still be inflicted on the debtor. 
4. If you stay in your homestead after bankruptcy: If you reaffirm the debt or just keep making payments each month to your mortgage company, don’t stop paying your homeowner’s dues. These dues are a lien on the homestead and eventually must be paid. The best practice is just keep them current. Even if you have the delinquent dues in your chapter 13 plan you should still make your current payments on time.
5. Dispute any erroneous credit reporting by homeowner associations: These associations are often run by individuals who don’t understand bankruptcy, so if they report to the bureaus make sure the reporting is correct and dispute it if it is not.

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