Often, when people purchase a home or condo, there is an association incorporated into the community where the new home is. This could be a homeowner's association or condo association, but the results are nearly always the same: you must pay them a separate bill each month. This bill, usually added as a standard rider to the sales contract on your home, could pay for any range of things. Failure to not pay the bill can result in serious consequences.
When you don't pay your mortgage, the bank usually contacts you and tries to figure out either a plan of repaying the arrears or your intentions regarding the home. They can then begin to initiate foreclosure proceedings, which, depending on the state, can take quite a long period of time. If you don't pay your association, however, they can begin the process of evicting you from the premises much more quickly. They can sue you for the balance, obtain an order of possession from the court, wait for the stay period for that order to be effective, and have you out of the premises much faster than foreclosure.
Bankruptcy does offer some solution to association dues. First, you can file a Chapter 13 bankruptcy to pay the association arrears back and get current on the plan. Your total unsecured debt, plus how much you owe on the association arrears, will constitute your trustee payment. You'll also need to continue paying your regular association payments. If your case fails, the association can file a motion to lift the stay to proceed with the eviction.
You can also file a Chapter 7, surrender the property, and discharge all of the old association dues. There is a caveat to this, however. You need to still continue to pay the association dues even after the bankruptcy has been filed if you intend to surrender the property. Post-petition association dues, up until the property is transferred back, are held liable to the homeowner.
Of course, these issues can be complex, so consulting an experienced bankruptcy attorney is key.
