Bankruptcy discharge of HOA Fees.

Chalk one up for Debtors -- HOA fees ARE dischargable in Chapter 13 In a memorandum decision, Judge William T. Thurman, the Chief Judge for the Bankruptcy Court for the State of Utah held that fees and assessments of a home owners association are dischargable under Chapter 13 if the debtor receives a "full compliance" discharge. Red Rock Legal Services represented the debtors in this case where an HOA in St. George, Utah attempted to have the automatic stay modified or a finding made by the court that the stay did not apply at all to the claim of the HOA. This would have allowed them to attempt to collect on the HOA fees/assessments in state court by seeking a judgment against the debtors. St. George Utah bankruptcy firm Red Rock Legal Servcies objected to the request on the basis, supported by the court's opinion that the HOA's claim was one that was addressed as a claim in the debtors' plan and that a review of the statute indicated that the exemption to discharge of post-petition HOA fees/assessments found under 11 U.S.C. sec. 523(16) did not apply to a case of a discharge under 11 U.S.C. sec. 1328(a). We will update with a link to the opinion as soon as the court has it uploaded to its site. However, if you would like to get a copy in advance, email me and I would be happy to send you a copy.

How can I get rid of my second mortgage?

Stripping a Second Mortgage What follows is a simplistic analysis of stripping of second mortgages in Chapter 13 bankruptcies. Your individual circumstances will definitely play a role in what you ultimately decide to do. If you are like many homeowners who owe more on their mortgage than the home is worth, you may be able to eliminate, or "strip," a second mortgage through the process of Chapter 13 bankruptcy. The United States Supreme Court has ruled that you cannot “strip” a second mortgage in a Chapter 7 bankruptcy. However there are some cases, where you can get rid your second mortgage so long as and because it is wholly unsecured. This means that the value of your house must be equal to or less than the amount owed on your first mortgage. For example, if you owe $175,000 on your first mortgage and $75,000 on your second mortgage, but your home is valued at $160,000, there is not enough value in your house to secure the second mortgage. A value decline such as this is not uncommon in today’s real estate market. The real estate bubble caused many homes purchased during the height of that market to have values that have come crashing down in the past 3 years. Although most home mortgage lenders do not oppose the process when presented with the facts regarding the mortgage balances and home values, this process can be complex. A second or subsequent lien on your property can only be stripped once you have completed the chapter 13 repayment plan. This means making all of the payments for the entire repayment period, receiving a discharge in your case and staying current on your first mortgage during your Chapter 13 bankruptcy.