QUESTION
Can HOA charge late fees, place account in collection, or place a lien on a home where the mortgage is in chapter 13?
Asked on Nov 02nd, 2016 on Bankruptcy - Nevada
More details to this question:
I overlooked payment on one HOA in 7 years. Upon realizing it wasn't paid, I sent it with the next one due, plus interest. After receiving my check and processing it, they put it in collection. Is that legal? Now they say I owe a $225 collection fee plus $1.03 in interest? I paid the full amount they said was due the last time and I've just received a letter that says I owe $225 more. Can they put it in collection after it's paid?
5 ANSWERS
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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If they cashed the check then billed you a fee for collection, that's fraud.
Answered on Nov 04th, 2016 at 6:16 PM
Even in Chapter 13, debt you incur after filing the petition is not subject to the authority of the Chapter 13. As to assigning a debt over to collection and incurring additional penalties AFTER you paid, I would have a problem with this. Best way to resolve is to have a friendly conversation with your HOA.
Answered on Nov 03rd, 2016 at 6:27 PM
1 Award
Yes it is legal. The HOA can charge you the normal rate if you are the title owner of the home. It does not matter if you are in a chapter 13 or not. Additionally, if the account is not paid in full, then they can charge you late fees and collection costs. Please note, though, the collection costs must be reasonable.
Answered on Nov 03rd, 2016 at 6:27 PM
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If you are currently in chapter 13 bankruptcy and the amount owed is for pre-bankruptcy filing amounts, they cannot collect. Those amounts, including late fees and penalties including attorneys fees must be put into your plan. If the H away has filed a lien it must be paid as a secured creditor. If the amounts are incurred after filing bankruptcy then the HOA is free to collect including late fees penalties and attorneys fees. It is important to note that these type obligations are nondischargeable if prepetition and in a chapter 7. However post-filing obligations are never dischargeable.
Answered on Nov 03rd, 2016 at 6:26 PM
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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If the HOA tried to collect on a claim after you paid it, they are likely violating one or another law. (Of course, if they tried to collect on the debt after the payment but before they deposited it to their account or posted it you can't blame them, but they have to stop trying to collect now that it's been paid.) They can say, of course, that they put it 'in collection' (whatever that means) before they received your payment and before they had time to credit it, and they incur that $225 charge whenever they send the bill to their collection agency. When you sent the larger payment did you let them know that it was for the prior bill and the current bill? If not, they have the right to apply the payment any way they wish. If, on the other hand, you put on the memo line something like 'September and October payment' then the recipient is obliged to apply it to those months.
Answered on Nov 03rd, 2016 at 6:26 PM