After a debtor files a bankruptcy case, the court enters a discharge order, which forever discharges and makes unenforceable many debts owed by the debtor. However, the bankruptcy code exempts certain debts from this discharge. Among these are debts “for 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 that has condominium ownership, in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest in such unit, such corporation, or such lot, but nothing in this paragraph shall except from discharge the debt of a debtor for a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case.” 11 U.S.C. § 523(a)(16).
The bankruptcy code appears to allow the association to continue to collect, and even foreclose on its lien for assessments that accrue after a debtor files bankruptcy. However, the association cannot pursue assessments that were due and payable before the debtor filed for bankruptcy. Always seek advice from competent legal counsel in complicated collections matters, as mistakes can be costly.
This site and any information contained herein is for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.
Authors: Ryan McCabe