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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 10149
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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How can a Homeowners Association collect a debt dues when

Customer Question

How can a Homeowners Association collect a debt for delinquent dues when the owner has been declared bankrupt & the bank has acquired the property & persauded the court to extinguish their debts?
Submitted: 11 months ago.
Category: Finance
Expert:  Lane replied 11 months ago.

Hi - I hold a JD (Juris Doctorate, a doctoral degree in the law), concentration in Tax Law & Corporate law, an MBA (specialization in finance & tax), and BBA from Mercer University’s Stetson School of Business and Economics, as well as CFP® and CRPS designations. - I can help here

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Please don't shoot the messenger here, but you can't

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When a Debtor files a bankruptcy case, asomethingn called an "order for relief" is entered.

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As you might guess, from the name ofthe order, the order for relief grants the Debtor some strong protections under the bankruptcy code.

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Doesn't matter whether they file Chapter 7 or 13, they obtain the full protections of the "automatic stay" once they’re in bankruptcy.

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The automatic stay refers to a part of the bankruptcy code that mandates that all collection efforts must cease once a Debtor files a bankruptcy case.

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There are some exceptions, like repeat filers, or for certain specifically excluded types of debt, but those are rare and if you believe for some reason that the automatic stay doesn’t apply in your situation, you should contact an attorney licensed in your state to help you.

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Violations of the automatic stay, even unintentional, quickly become very costly. It may not seem fair, but if you do not heed the Debtor’s bankruptcy filing and cease all collection, you'll very likely end up facing an order for you to pay the Debtor money on top of having your debt wiped out.

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Now, if the person (or their attorney) wasn't thorough enough to include this IN the bankruptcy estate, then the minute the bankruptcy case is discharged you can begin collection proceedings on this accrued debt.

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Further, the dues themselves, (if your charter and bylaws would still consider this person a member) aren't debt, they're fees ( a bill ) not a balance, a liability on his personal balance sheet, so there's no reason - again, as long as you still consider him a member - that you cannot continue to bill for current fees.

Expert:  Lane replied 11 months ago.

Here's an excellent overview of some of these issues from the attorneys at Nolo.com

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http://www.nolo.com/legal-encyclopedia/creditor-trying-collect-debt-during-bankruptcy.html

Expert:  Lane replied 11 months ago.

Let me know if you have questions

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Lane

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Expert:  Lane replied 10 months ago.

Hi,

I’m just checking back in to see how things are going.

Did my answer help?

Let me know…

Thanks

Lane

Expert:  Lane replied 10 months ago.

Let me know if you need more detail here...

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If this HAS helped, (andyou don’t have additional questions on this),I'd really appreciate your positive rating …(by using the stars or rating request on your screen) … … That’s the only way I'll be credited a portion of what you've paid JustAnswer.

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Thank you,

Lane

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