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.

One response to “Bankruptcy and Assessments – What Do Owners Really Owe?
  1. Your first statement is on the money. These days, people are increasingly-less-likely to “tough it out” or to make any effort to work things out. What I’ve hear is “I’m just going to file bankruptcy,” or “I’m just going to let the bank take back the house,” as if these are the most-viable options. Actually, they should be the actions of LAST resort, but people hear horror stories and just assume that creditors will not work with them, so they don’t even try. Of course, with that notion, it must be expected that no one will work with them! And they certainly don’t give a hoot about how this affects the remaining members of their association. In fact, I’ve actually heard many say that this is also their way of “sticking it” to the HOA for its audacity of trying to collect on the delinquency. People these days have a strange notion about responsibility and consideration for others. Just because you paid more for a home than it is currently worth doesn’t give you the right simply to give up. I think it ought to be much harder for a person to claim bankruptcy or to go into foreclosure. And once either of those actions have been taken, that person should not ever again have good credit. I know 2 people who walked away from their homes and turned around and bought new ones. And here, I thought lenders had tightened up their requirements. Silly me! Sell the house, get the commission, and let somebody else worry about the financial ramifications later. What a country!
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