How many times have you heard a homeowner say, “I gave up my house in my bankruptcy, so I don’t owe any more assessments”? Homeowners commonly make this claim. However, most of the time, they are wrong.
Most Chapter 7 bankruptcies include a Statement of Intent, notifying the Court and creditors whether the homeowner plans to retain or surrender their property. Even if the homeowner intends to surrender their property and they later obtain a discharge of their bankruptcy, the homeowner is not completely off the hook.
The discharge will get rid of any personal obligation to pay the balance due as of the date the bankruptcy was filed. However, the homeowner remains responsible for any assessments that come due after the date the bankruptcy was filed (not discharged) until they are legally no longer the owner of the property, which usually happens through a Public Trustee foreclosure sale. The homeowner remains the legal owner of the property, and responsible for assessments, until the foreclosure sale is completed.
More information about this topic, see our article “What Do Owners Do with Their Properties After Filing Bankruptcy?”
If you have any questions, please contact us at 303-432-9999 to discuss this issue with one of our collections attorneys.