A common misconception of filing a Chapter 7 bankruptcy and surrendering your house, or “walking away” from it, is that once your case is filed you no longer are responsible for taking care of that property. That simply is not the case. Until the bank actually comes in and forecloses on the property you remain responsible for any taxes, fees or assessments that come with owning that property. These taxes, fees or assessments are said to “run with the land”. That means that for as long as you are holder of the deed of that property you are responsible for taking care of that property. The bankruptcy will discharge the debt you owe on the mortgage, but until the deed is actually taken back by the bank, the homeowner remains responsible for taking care of that property, which includes the payment of condo, homeowner, or subdivision fees. This law is supported by Section 523(a) 16 of the United States Bankruptcy Code.
If these fees, taxes and assessments have accrued to the point of becoming difficult to pay back or a lien has been placed on your property, and you want to keep your house, filing a Chapter 13 bankruptcy may be a good option for you. These fees can be paid through a Chapter 13 bankruptcy plan over a period of 36-60 months. If a lien is placed on your house and you eventually would like to sell that property, the title will be unmarketable. With that said, it is very important that any homeowner fees or assessments are paid in full to remove any lien that has been placed on your property. Once the fees have been paid, the lien will be removed and you will be able to sell your house. It is also very important to keep in mind that you will have to continue to pay monthly or annual dues even while you are in this Chapter 13 bankruptcy or you will run into this same problem all over again.
If you have any questions about this or anything else related to bankruptcy, it is my recommendation that you consult a St. Louis Area Bankruptcy Attorney today. We offer free consultations at a number of locations.