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A Chapter 7 Case for a Family of Four
A young married woman with a husband and two children, who are living with her mother, recently posted on a bankruptcy site about her financial woes. She lives in New Jersey and wants to know if she should file for a Chapter 7 bankruptcy.
No one can really tell her whether she should file bankruptcy or not, but understanding the bankruptcy process helps those considering filing and whether you should make the decision.
Filing for a Chapter 7 bankruptcy depends on a lot of financial circumstances. Filing any bankruptcy depends on similar circumstances. He are some of the circumstances you might want to consider before filing bankruptcy:
The Means Test Should be Considered
To file a Chapter 7 bankruptcy in any state, you have to be either below the median income for a family your size in the state in which you live or you have to pass the Means Test.
The Means Test is a test devised by Congress in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. It was devised to stop serial filers from filing bankruptcy and abusing the system, and the Means Test itself is a complicated formula to help you see whether or not you have enough disposable income to pay some of your debtors. If you do, you have to file a Chapter 13 in lieu of a Chapter 7.
In the case of the family of four in the illustration, the husband makes $38,000 per year and is not necessarily the only household earner. The mother’s salary must be included in the means test to determine whether the husband and wife qualify. In New Jersey, the median income for a family of four is $101,000, so depending on the mother’s salary, it would determine whether or not the couple would have to pass the Means Test.
Your Personal Assets Play a role in Helping You Decide
How much income you make is only one of the deciding factors in determining whether you can file a Chapter 7 or not. Most Chapter 7 bankruptcies are filed by people with little or no personal non-exempt assets.
State and federal laws determine what personal assets you can keep when you file for any bankruptcy. Exempt personal assets are those defined by either state or federal bankruptcy laws. In a Chapter7, any non-exempt asset will be taken and liquidated in order to pay off unsecured debtors in a prioritized list.
The couple in the illustration did not have any personal non-exempt assets, and from that perspective, they would be candidates to file a Chapter 7.
The Amount of Dept You Owe Can Help You Decide Whether to File
How much debt you owe can play a large role in not only determining whether or not to file bankruptcy, but it can help you determine which bankruptcy to file.
A Chapter 13 has ceiling limits on the amount of debts you owe, but a Chapter 7 does not. Neither have a minimum amount of debt to file, but what is the sense of filing if you have no debt nor assets to protect?
If you cannot pay down any principal on the debts you owe plus the interest owed after paying all your living expenses that include taxes and retirement, you are theoretically bankrupt. If you owe large unmanageable debts that are non-exempt from bankruptcy discharge and cannot possibly begin to pay them down within a five year period, you might be a candidate for filing a Chapter 7.
The couple in our illustration owes over $18,000 in credit cards, a small hospital debt, and they have two very small exempt student loans.
From the information provided and since they live with her mother and make the kind of money they do, there is the possibility they can pay much of their debt off in five years.
Whether the couple decide to file bankruptcy or not, they probably need to sit down with an experienced bankruptcy lawyer to help them decide.
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Community Property Defined
Community property can be defined as a marital property system providing for the creation of a marital estate whereby the assets included in the estate are managed and jointly owned by the individuals married.
The marital property regime, or community property, has been established in civil law in some states in the United States and is associated with common law in other states. The idea of community property carries the idea of equal asset ownership.
Non community property states attempt to divide up the assets of the marital estate depending on who made the contributions of the assets to the estate. Ideally, each asset found in a non community marital regime can be determined as to who owns the property in the case of a divorce within the marriage.
Whether of not a marriage is a community property marriage or a non community property marriage has an influence of the bankruptcy process if either or both of the marital participants file for bankruptcy.
Authority in Dealing with Community Property and Bankruptcy
Federal bankruptcy laws are the primary source of authority for filing a bankruptcy, but the federal laws cannot supersede state community property laws after the fact. A decree made by a state judge on community property cannot be overridden by a decree of a federal bankruptcy judge if the state judge made the decision prior to a client filing bankruptcy or was not privy to the bankruptcy.
An Illustrated Event Where Both Laws Collide
An example of that actually happening recently occurred when a wife was awarded the non community property of the car which was in the husband’s name. The husband still owed money on the car.
The husband, who didn’t challenge the divorce, filed for Chapter 7 bankruptcy protection before the divorce decree went forward. The divorce court was not aware of the where the husband was when notification of the decree went out. The bankruptcy judge was not aware of the divorce decree, and when the bankruptcy closed, the debt on the automobile was discharged.
Unfortunately for the filing husband, the divorce court judge found him in contempt of court when he failed to make the discharged payments for the car. It is at this point the husband began learning the process on the order of events. The wife had kept the car, and it was in the state in which she filed divorce. The wife thought the husband would pay for the car since she won it in divorce court, and the husband thought the loan on the car was discharged in bankruptcy. An arrest warrant was sent out for the husband in the state the wife resided.
What About The Third Party?
On top of that to complicate matters further, neither courts gave consideration to the lien on the vehicle. Liens are not discharged in bankruptcy, and the lien holder had the right after the bankruptcy closed to repossess the car, the true owner.
On the other hand, it would be interesting to see how it eventually played out concerning how the divorce court judge handled the lien.
When Laws Get Complicated, Get you a Bankruptcy Lawyer
When you mix community property with bankruptcy, the laws get complicated. That is why it is wise to have a bankruptcy lawyer on your side when you file such a complicated case.
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Terrell Owens is a famous athlete who set National Football League records and is in the all time top five for several receiving categories, including yards and touchdowns. Now, the famous athlete has recently received news coverage for joining the Texas based team, the Allen Wranglers, of the indoor Football League, of which he is one of the owners.
The most recent news covering the flamboyant star’s life happened just today when Yahoo Sports published a piece about the athlete being desperately close to bankruptcy. According to the article and based on the Owens’ profile in the magazine, Gentlemen’s Quarterly, “at 38 and out of football, he’s lonelier than ever, and running out of money. Owens comes across as wounded, broke and desperate. When people text him to ask where he is, he replies back: I’m in hell.”
Owens story is not unique amongst those who are called a famous athlete despite his having earned over 80 million dollars in his professional career. Consider these professional sports statistics reported from numerous news sources:
- By the time NFL players have been retired for two years, 78% of the former players have gone bankrupt or are under financial stress because of joblessness or divorce.
- Within five years of retirement, an estimated 60% of former NBA players are broke.
- MLB franchises and its players have been riddled with bankruptcies throughout Major League Baseball’s illustrious history.
There has always been speculation as to why these high dollar franchises and athletes so often go belly up with their high dollar incomes, but for the most part, the players entering the draft get rich quick receiving more money than many of them have ever seen or even heard of in their lives. None are not born with the knowledge of economics, and many do not know how to handle such money. They and their parents often are dependent on total strangers to help them manage the money. Strangers often take full advantage of both athletes and parent’s vulnerability.
Owens shared with the news media the reason he lost all of his millions was because of bad financial advice and poor investments. He admits he was too trusting, and the wrong people he trusted failed in their promises to take care of him financially.
Mismanagement of funds or income is always one of the leading causes of bankruptcy. It doesn’t matter whether you make millions or live off a shoestring. If you cannot manage a budget, make relative safe investments through diversity, and discipline yourself to live within your means, you will eventually and most likely go bankrupt.
To my knowledge up to the date of this posting, Owens has not filed for bankruptcy protection. Instead, he has selected to invest his talents and time in a new business adventure with the Allen Wranglers. I offer Owens my best wishes for success in his new adventure.
All of us who work and seek the American Dream in the United States, in my opinion, have a Constitutional right to the pursuit of happiness as long as they are not breaking any laws.
You are no different than Owens or any other rich and famous person. It is your Constitutional right to file for bankruptcy protection when you go broke, but the knowledge of filing bankruptcy is no more born in us than knowing how to handle our economics. Therefore, you need the advice of a bankruptcy lawyer before you file.
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Chapter 13 Personal Question
Eventually it all comes out in the wash. Bankruptcy is no exception. This personal bankruptcy story was posted on the internet today to indicate just how real bankruptcy is: “Can you really claim cigarettes? Where would that go (expense related items for Chapter 13)? Is that a extra expense? Just wondering. I didn’t mention I smoked but maybe I should. I also didn’t say anything about money for lunches ex coffee or soda they can add up. What do you think? Should I just let it be?”
Complications and Vices of a Chapter 13
The bankruptcy forms you are required to file for any bankruptcy are complicated, but the forms for a Chapter 13 are particularly more so. Trying to figure how much disposable income you can have to pay your debtors and still live is a stressful and hard thing to do.
Asking about any vices like smoking you might want to include in expenses are real questions asked by real people who file for bankruptcy protection, especially for individuals who file a Chapter 13.
I am using the term “vices” in the sense that it might be considered a habitual and usually trivial defect or shortcoming. Vices in a Chapter 13 represent not providing enough income to pay your living expenses when you make your plan.
This mistake will inevitably either cause you complete failure in finishing your Chapter 13 plan, or you will be in utter misery and turmoil for trying. Over 60% of Chapter 13 cases fail because of the discipline required to finish the plan, and much of it could have been avoided with proper preparation of your plan.
Vices and a Generalities About How to Handle them in Your Plan
Whether or not you consider smoking as a part of any vices is not the point. If you have chosen to exercise your Constitutional right to file for bankruptcy as well as the individual right choosing to smoke, you have every right to try to figure out how to pay for both.
Bankruptcy court administrators are human too. Some of them smoke and some do not. Each court has its own intricacies because the system is run by humans. This fact prompted one blogger in answering the debtor in the illustration with, “place smoking in the addiction or luxury spending category.. but not life necessity. Take your pick.” The point being is that it really does not matter where you place the item as long as you cover the expense for the luxury or habit so you won’t fall short on your Chapter 13 plan.
Another blogger summed up the best approach when he said, “In the past many of our forum members have posted that they were allowed to include the costs of cigarettes in their legitimate expenses when they filed. Talk to your lawyer to see what to expect in your local court with your trustees when you file.”
Other Suggestions
The idea of a Chapter 13 plan is to be able to pay off your debtors with disposable income while maintaining a fair and equitable lifestyle. You really need to list every legitimate expense whether it is supporting your habit of smoking, providing yourself with lunches, coffee, soda or any other food you take in order to go on living. Trying to hide these activities is very counterproductive, so list them like they are normal expenses. That way, you can avoid the vices in a Chapter 13.
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A Personal Story
This personal bankruptcy story along with a question was shared on a bankruptcy forum website this January in 2012: “I currently have my Chapter 13 monthly monies taken directly from my current employer once a month and have been for the last 18 months. I applied for a new job but was wondering what steps i would have to take if i accepted this new position. Do i need to completely re-do all my paperwork with the trustee, or is it as easy as sending in my payment on my own and not telling them?”
Not Telling Trustee Could be Bad Idea
Not telling a bankruptcy trustee important information during a Chapter 13 process might be bad idea, especially if the trustee finds out about it after the fact and you have broken a bankruptcy law you were not made aware. You should always consult with your bankruptcy attorney before concealing any information that may or may not affect an ongoing Chapter 13. The bankruptcy lawyer should know the law affecting your request on bankruptcy or at least know how to find it.
Filling Out Schedule I
When you fill out your schedules in your bankruptcy application as an individual debtor filing a Chapter 13, you will be required to fill out Schedule I, Current Income of Individual Debtors. The first 16 lines of the this schedule ask you to give a description along with documents supporting your current combined monthly income. Line item number 17 on the schedule, the last request made by the document, requires this information from you: “Describe any increase or decrease in income reasonably to occur within the year following the filing of this document.” Two lines of space are allowed by the applicant for any answer to this requirement.
You cannot lie about what you are anticipating in income for the coming year on line item number 17. That means if you are seeking new employment or you are anticipating a raise, you need to indicate so in the two lines provided. Again, this is where a bankruptcy lawyer can help you in making decisions based on potential gray areas of the law.
One thing is for certain, failing to reveal such information can be considered fraud if proven that you knew of the event prior to filling out Schedule I. Therefore, if you receive an increase in income after filling out Schedule I, the trustee could request a dismissal of the case, or worse, accuse of you of fraudulent intent if he suspects you knew of the event prior to filing. Either or both of these situations could be considered counterproductive to your intentions concerning your filing bankruptcy.
Potential Answers to a Debtor’s Questions
Generally, in answer to the inquiry made by the illustrated personal bankruptcy story, you most likely would not need to provide the trustee with all new paperwork and completely start over. If you listed the potential increase in income on line item number 17, you would need only tell your lawyer or the trustee of the increase. If there is any additional paper work needing to be submitted for the change, your lawyer or trustee will provide you with the details concerning the change.
In the event the increase in income is unexpected and was not listed on line item number 17 in Schedule I, there are circumstances that would allow you to keep the increase because it happened after the filing date. Nevertheless, it is a good idea to consult with a bankruptcy lawyer about these potentially gray areas of the law.
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Not all debts are discharged in a bankruptcy. Debts discharged vary under each type of bankruptcy in the Bankruptcy Code. Section 523(a) of the Bankruptcy Code lists the different categories of debts that are not discharged in bankruptcy. There are 19 categories of debts that are exempt from discharge under chapters 7, 11, and 12, and there is a more limited list of exceptions for discharge under a Chapter 13.
Here are Some common questions asked about debts that are not discharged in bankruptcy:
What are the most common types of debts not discharged?
- Debts not set forth in the lists and schedules the debtor must file for the bankruptcy court
- Certain type of tax claims
- Spousal or child support
- Debts awarded for willful and malicious injuries to people or property
- Debts obtained through certain government fines and penalties
- Debts for student loans except for the cause of hardship
- Debts for personal injury caused by operating a motor vehicle while intoxicated
- Debts owed to certain tax-advantaged retirement plans
- debts for certain types of homeowner association fees
What kinds of exemptions from discharge are not automatic?
Debts incurred by fraudulent means listed under 523 (a) (2) and (4); and debts incurred for willful and malicious injury by the debtor to another entity or to the property of another entity as listed in 523 (a) (6). Creditors must ask the court to determine that these debts are exempt from discharge, or the debts will not be granted an exemption under these sections.
Who can receive copies of the discharge besides the creditors?
The creditors will each be sent a copy of the discharge order, but the debtor and the debtor’s attorney can also receive copies. The creditors, when notified of the final order of discharge, will be informed that the debts owed them have been discharged. It will not list the debts exempt from discharge in the order.
The notice will also inform the creditors that they should not attempt any further collections and are warned any further attempt in collection efforts could subject them to punishment for contempt of court. Any failure by the bankruptcy court clerk to get a copy of the final discharge order to any creditor will not validate the discharge and legal responsibility of the creditors to vacate their efforts of collections.
Can a discharge be revoked?
A discharge can be revoked if the discharge was obtained fraudulently; if the discharge was obtained by any willful and malicious injury by the debtor to another entity or to a property; or if the filing debtor fails to explain any misstatements discovered in an audit or to provide documents for an audit. Unless certain circumstances prevail, a request to revoke a discharge must be made within one year of the discharge.
Are there any other conditions that may occur in bankruptcy to affect discharge?
Bankruptcy laws can be very complicated, and the list included in this article are not conclusive. There are other conditions that can occur in a bankruptcy that might affect a discharge. That is why it is wise to consult with a bankruptcy attorney when having to file for bankruptcy.
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Homeowner Debt Relief
Congress passed the Mortgage Forgiveness and Debt Relief Act of 2007 in response to homeowners owing tax mortgage debt after facing foreclosure. The Emergency Economic Stabilization Act (EESA) in 2008 extended this tax relief another 3 years until the end of 2012.
Federal mortgage law has been interpreted to say in the past, before the new relief laws, that any amount of a mortgage debt a borrow forgives is to be treated as income. The Federal Government and Internal Revenue Service concurred with that interpretation of the Federal law. Under the old law, any recipient of debt forgiveness was reported to the IRS with a 1099 form, and the recipient had to pay income taxes on the windfall.
The signing of the Mortgage Forgiveness Debt Relief Act of 2007 clarified the interpretation of the old law to forgive the taxes too, a relief felt primarily by those who had lost their jobs and were facing foreclosure and possible bankruptcy. Mortgage foreclosure along with a high unemployment rate are two of the largest contributors to financial failure and bankruptcy filings.
Bankruptcy Debt Relief
For those people filing a Chapter 7 bankruptcy, the mortgage debt is forgiven in the form of being discharged, and the automatic stay prevents a foreclosure on the property. That means the debtor is no longer responsible for the mortgage debt on the property mortgaged, and the debtor does not have to deal with the mortgage company until the bankruptcy is complete.
Until relief came in the form of the new law changes, those receiving a mortgage debt discharge through bankruptcy protection were still responsible for paying the income tax on the discharged debt. The Federal Government looked at the forgiveness of the loan as income, even though many of the bankruptcy filers had no jobs.
The burden of paying the taxes on such debt, losing a job, having to file for bankruptcy protection, and facing an economy that did not look anything like it was going to recover was far too much to handle for many of those filing bankruptcy.
What Happens to Those Filing Bankruptcy After the Relief Act Expires?
As the laws currently stand, if you file a bankruptcy after the end of 2012, you will most likely get a 1099 once again on your discharged debt. Unless Congress extends or makes the relief permanent, the relief is just temporary.
Unfortunately, income taxes are exempt from bankruptcy discharge in most circumstances. That is one good reason Congress should grab the bull by the horns and make the relief permanent for discharged debt. There is nothing for the Federal Government to gain from forcing people to pay what they cannot pay, or at least, the greatest majority of them.
Solutions other than forgiveness of the debts have been offered. New laws passed addressing the modification of mortgage loans have been recently offered to allow homeowners to stay in their homes and prevent a foreclosure. Unfortunately, the laws have lacked “legal teeth” to bring the mortgage lenders to the table. Maybe it is time to realize the economy and housing market have been mortally wounded, and it might take radical legislation to solve the issues. Too many empty houses sit across the nation that need to be filled with happy paying homeowners.
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The Protest
In light of Wikipedia, Google, Modzilla Firefox, and many other leading free spirited activist’s protest yesterday over the United States Congress passing a censorship law that would regulate the internet, I feel I would be irresponsible as a legal content blogger on bankruptcy law not to address the philosophical issues raised by the protest, and how the subject of the potential tyranny of censorship might apply to bankruptcy as well.
The Tyranny of Censorship
To quote Wikipedia, “Censorship is the suppression of speech or other public communication which may be considered objectionable, harmful, sensitive, or inconvenient to the general body of people as determined by a government, media outlet, or other controlling body. Tyranny refers to a despotically ruled state or society.”
Even though the vote by Congress on proposed law is a political issue, the significance of the issue should make dialog on the topic philosophical. Changing how America addresses its independence made possible by revolution from despotic rule should transcend politics.
Very few would not argue that the cutting edge for American independence evolved from individuals standing up for their rights to the formal passing of the Bill of Rights. The Bill of Rights separates us as Americans from all other societies in a philosophical way. By the passing of individual rights, we said as a society that we can govern ourselves by cooperating within a nation as individuals, not as self serving collective groups.
No group within our society has the right to undermine the Bill of Rights, regardless of their perceived intention. That includes our political representatives and their lobbying counterparts. Collectivism is the emphasis on collective rather than the individual action or identity. This recent attempt to undermine the individual right of free speech on the internet should be construed as a collectivist attempt to censor what certain individuals might think and say to defend their individual rights.
If Congress wants to suppress the masses by limiting its use of the free speech forum of the internet, all the controlling body has to do is pass a law that circumvents the Bill of Rights. To allow Congress to pass a law circumventing the Bill of Rights, in itself, might be construed by many as allowing Congress to practice a form of tyranny.
How the Tyranny of Censorship can Relate to Bankruptcy
How all of this censorship talk relates to bankruptcy comes from my reading a blog by a debtor who filed a Chapter 7. He claimed to be castigated by his fellow Americans for exercising his Constitutional right to file for bankruptcy protection and rebuild his credit. One of the bloggers called him a “thief.” This rhetoric should have been expected from a group whose self interest is epitomized by the name of their website, fatwallet.com.
If we allow every self interested group to control what each and every one of us say and think through censorship, and that includes any loosed tongued censorship through the use of rhetoric, we have lost any regards for individualism in America. That especially goes for bankruptcy discussions on the internet.
No one has to feel like they have to go to debtors prison because a group of self serving tyrants says they need need to. To the contrary, the Constitution guarantees your individual rights whether any particular group of despots thinks so or not.
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A Chapter 7 can be filed by individuals, married couples, partnerships, and corporations. This type bankruptcy is normally used by individuals without many assets and who have little disposable monthly income, if any.
To qualify to file a Chapter 7, you normally have to be able to pass a Means Test devised by federal law, or you have to be at or below the median income for a family your size in the state in which you live and are filing. For the most part, the laws are plain about who qualifies to file a Chapter 7 and who does not, but there are exceptions to the rule.
If you are filing a non-consumer bankruptcy, you do not have to take the means test to qualify. To be considered a non-consumer bankruptcy filer, your non-consumer debt, ie. business related debts, must be greater than your individual or personal debts that have evolved through living expenses.
As an example, one debtor shared her and husband’s personal bankruptcy story on an internet bankruptcy site stating the bulk of their debt came from a personal business loan guarantee of $150,000 that was greater than their own personal debt. They rented their home, could hardly make ends meet even though living frugally, owed $13,000 in credit card debt they had been paying the minimum on for years, and had less than a $100 monthly disposable income by paying the minimum on their credit cards. And that, if there were no emergencies. She was worried she could not pass the Means Test and would have to file a Chapter 13.
Broader than just business debt, debtors who have primarily non-consumer debt are not subject to the Means Test under Title 11, U.S. Code 707 (b) under which the U.S. Trustee may dismiss or convert a Chapter 7 for abuse. The law specifically states that the provisions provided for under this code are for “primarily consumer debts.” The law further states by definition that a consumer debt is “a debt incurred by an individual primarily for personal, family, or household purpose.”
In effect then, if the debts are not primarily consumer debts, the Trustee cannot pursue the avenue of challenging the debtor as to the abuse provisions in the law. Therefore, debtors who have primarily business and/or non-consumer debt are not subject to the Means Test.
In the case of the illustration, the couple obviously has more non-consumer debt than personal debt. If any of the credit card debt was spent toward the business, it too would be counted as non-consumer debt.
Therefore, the couple would not have to take the Means Test to determine whether or not they qualify to file a Chapter 7. They automatically qualify to file due to the amount of non-consumer debt. The non-consumer debt in this instance, if unsecured, can be totally discharged in a Chapter 7. If the couple does not have many non-exempt assets, filing a Chapter 7 might be the type of bankruptcy they should pursue.
An experienced and qualified bankruptcy attorney would be in the best position to help the couple determine what they actually should do about filing bankruptcy.
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It is bad enough when the economy turns down, the price of your residence gets upside down in comparison to your financial obligation to a mortgage payment, your mortgage payment lender refuses to cooperate with you on a modification or refinance of your original loan, but when you start to get into trouble with a closed community which has homeowner association fees, you just don’t know what trouble really is, until a scam on that association takes place.
Scam Illustrated
If you don’t believe me, ask Wanda Murray who once thought buying a retirement condominium in “Sin City” was a great idea. The idea she and her husband, who had worked and lived in the cold east while saving for retirement years all their lives, should buy a condominium in a closed gated community and then expect to spend time living a full life under the Nevada sun without the worry of working on a yard or home, is not a novel idea. The homeowner association seemed like the perfect approach to retirement and a reasonable financial obligation for the effort.
Wanda and her husband bought their dream retirement in 2002, but it was not long before their dream retirement turned into a nightmare. The entire homeowner association they purchased into became subject to an organized scam. By 2008, the association was eventually bankrupted by the organizers of the scam, committing over 8 million dollars of borrowed money, all in the name of the association, to businesses owned and operated by the same scam artists and their cohorts. Without realizing it, Murray and husband’s financial obligation was getting deeper.
Murray served on the homeowner association board and was an eye witness to all the shenanigans pulled by the scam artists. Eventually, the FBI investigated the scam and is currently prosecuting the perpetrator. The FBI stepping in was a good thing, but it may not be enough to thwart the financial obligation left behind.
Murray and husband moved out the gated community in 2008 and are currently living in a nearby development. They had to let their dream home slip into foreclosure, both vowing to stay away from a homeowner association in the future.
Homeowner Association has Effects on Bankruptcy
Homeowner association fees can be discharged in bankruptcy, but the fees can continue on through and after the bankruptcy process. So in effect, Murray and her husband might still have a financial obligation to the homeowner association in the form of fees and their portion of any of the debts made by the homeowner association while the scam artists were in control. Technically, until they can get their names legally untangled from the ownership of the condominium, their financial obligation might be for paying the fees and their portion of debt, even if they were to file bankruptcy. One exception to this fact is that if the homeowner association goes bankrupt, the debtors then might have the debts discharged.
Starting the foreclosure process does not automatically release a homeowner from certain financial obligations. Paying homeowner association fees and other association obligations only pass with the transfer of title or a release of the obligation by the homeowner association.
A homeowner association financial obligation can be discharged by bankruptcy up until the close of the bankruptcy. All new homeowner association obligations after the close of a bankruptcy are legal obligations you are expected to pay until the transfer of title takes place.
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