Homeowner fears foreclosure by association over back dues

Question: I’m overwhelmed in making payments to my homeowners association. Over five years our association has specially assessed owners thousands of dollars per year. I owe tens of thousands of dollars in back dues on two condos I own in the same HOA and have agreed to payment plans. Monthly dues are around $2,400 per condo and the plan adds at least $420 to each payment. I have one condo title in an LLC and another in a trust and am attempting to restructure my bank loans. Is there any way to defend against the association foreclosing on me besides filing Chapter 7? If Chapter 7 is filed, what happens to the dues debt? To stave off foreclosure by the association and/or the bank, can I file Chapter 11 on the condo with the LLC title? If I pay the tens of thousands of dollars in past dues at one time for both properties it will deplete my savings account, but is there any advantage paying one lump sum?

Answer: There may be ways to defend against the association. It would be barred from foreclosing if you have a payment plan and make timely payments. Missing a payment under your agreement could result in forfeiting any benefits under the payment plan.

Filing for bankruptcy protection under Chapter 7 will delay but may not stop the foreclosure process. Chapter 7 will discharge most debts that arose before the filing of the petition but not any debt that arises afterward. The Bankruptcy Act (11 USC 523(a)(16)) exempts from discharge “a fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor’s interest in a unit.”

Simply, association dues incurred before the Chapter 7 petition was filed are dischargeable. Those incurred after the petition is filed are non-dischargeable and become a new debt for the titleholder.


If a lien has been filed against the unit, the association can foreclose on that lien after the bankruptcy is over unless the lien is set aside (essentially put on hold or removed by the court) during the bankruptcy process. If the property has equity above the exemption provided for owners in bankruptcy, the court-appointed trustee can sell the property and use that equity to pay trustee’s fees and outstanding debts. The owner would lose the property under this circumstance.

Filing a bankruptcy petition under Chapter 11 requires the debtor to enter into a repayment plan over a period of years with the unpaid balance being discharged. That does not stop the continuing additional debt from post petition monthly obligations or assessments, all of which must also be paid.

Send questions to P.O. Box 10490, Marina del Rey, CA 90295 or email