As we all know, to determine the state of struggle against lack of laws, if a lender is an attempt by a deficiency after a foreclosure request. We also know that a bankruptcy discharge, the owner of such liability is protected, regardless of what the debtor must statutes of the State, whether a lender is a study that said a disability request.
While liability protection under the foreclosure of the mortgage bank remains a major advantage of the bankruptcy discharge, a relatively new responsibility, after the bankruptcy petition has emerged in recent years. What our customers are often surprised when we create the consultation on the expansion, while necessary, after filing a bankruptcy petition.
What I'm talking, of course, are the HOA fees, and to a lesser extent, municipal water and garbage fees. As everyone should know how to collect ongoing costs after the request, and just because they after the request, which repeatedly represent the new debt - and a new debt, the bankruptcy discharge n 'has no influence on them.
The typical case is a debtor in Chapter 7 bankruptcy, which means that he or she can not afford, decides to keep a budget. Perhaps it is a year or more behind the first mortgage. Perhaps now is the debtor (as usual here in California) declined $ 100,000 or more under water on the property and the lender to offer a loan modification, despite months of efforts by the owner of the house. The house is probably not worth the guaranteed amounts, in the coming decades. The monthly payment to one ratio, which is sixty or seventy now, hundreds of family income of the debtor is adapted. This house must be restored.
The problem of course is that the assignment in bankruptcy are not excluded from the system by the lender. In recent days, say three or even two years ago, I would. But now mortgage lenders just do not want the property of their books. I often think, an astute analyst of the bowels of the Department of foreclosure of the mortgage bank is a screen, looking for all the characteristics of banks in a particular zip code displays take place. That would be another, and the bank does not want to sell another property owned by banks cannot half the amount they pay only four years. We could go on and on about the carelessness of the Bank's decision to go had the original loan, but that's another article. Today the estate is a hot potato, and it cannot do anything for the debtor or the debtor bankruptcy attorney to force the lender to take possession of the property.
Hence the dilemma. There are also other parties here - especially the owners' associations. HOA have to see it fall in many areas of their monthly payments, as more and more members have not to pay. Thought their ability to collect fees from the conspiracy in a long time, through their ability to maintain a good grasp and are guaranteed. Even if the lien of the first, or even a second mortgage lien is subject to the time of the valuation of real estate there is almost always enough equity in real estate to all HOA. But no more. Today's homeowner associations often have no hope for recovery of debt in equity in a mortgaged property.
So where does this go to the debtor in bankruptcy, must deliver their goods? Between a rock and a hard place. The lender cannot take possession and take several months or a year after the bankruptcy. HOA fees - water, garbage and other municipal services - continue to accrue monthly. The debtor often has a long and we cannot rent the property. But rest assured, the liability of the owner of the recurring costs are not rejected by the bankruptcy, because they occur after the request. He or she will be on the hook for the new rates, which are repeated until the bank took title to remain finally. Owners associations, the owners usually complain after the publication, and is actively seeking attorneys' fees, interest, costs and other things to think about their losses. This can sometimes lead to tens of thousands of dollars in new debt that the bankrupt debtor does little hope of meeting for eight years if he or she insolvency again.
This problem would not occur if the lender would prevent fast given in connection with a bankruptcy debtor a home. We can literally bankrupt lawyers ask the lender usually points out that - or better yet, instead of accepting a deed in foreclosure, but in vain. You just do not want the property. What advice, then, to give the debtor in this situation? The options are few. If the debtor does not hold, the rules of the property before filing for bankruptcy, it would eliminate the problem. But this delay is not a luxury that most borrowers can afford. If this option is not available, the debtor must live in the property and continue their HOA dues and services, community, or if the property a second home, for example, try to rent the property to cover the cost of paying permanent.
Ultimately, the bankruptcy code in this situation. Also, most of the laws, homeowners associations States. To proceedings under the Bankruptcy Code require would be abandoned lender to take possession of ideal, but given the problems that Congress and the political orientation, which can comfortably say that the possibility of a legislative solution is via remote control.