HOA Foreclosure

Many homes, condominiums, and townhouses in Florida will be included in a homeowner’s association (HOA). If the property is part of an association, the homeowner will likely be required to make payments to the HOA. The fee will vary between each association but in some cases can be hundreds of dollars each month. Further, the HOA may be able to add late fees, attorney costs to the balance. If the delinquencies pile up, an HOA foreclosure action could be filed.

Homeowners are often surprised to learn that their homeowners’ association may be able to foreclose on their home. HOA’s may be able to seek foreclosure in Florida for missed payments or failure to maintain the property. Additionally, there may be other grounds set forth in the Association’s declarations and by-laws.  In many instances, an HOA foreclosure in Florida will even involve homes with no mortgage or other liens. Fortunately, homeowners who have fallen behind on HOA payments still have rights to challenge the foreclosure. If you need to stop an HOA foreclosure in Florida, contact Florida Law Advisers to speak with an HOA foreclosure attorney.

Can the HOA File Foreclosure in Florida?

Banks are not the only institutions that seek to foreclose on homes in Florida. Thousands of foreclosure cases are filed by homeowner’s associations in Florida each year. HOA’s are very aggressive, in some cases seeking foreclosure when the homeowner is only a few dollars behind on their bill. Further, it is not uncommon to have a balance of only $100 increase to over $5,000 after the HOA adds their late fees, interest, and attorney fees. Fortunately, some options can help prevent an HOA foreclosure sale.
Similar to banks, the homeowner’s association will need to file a foreclosure case in court and receive approval from a judge before the home is foreclosed. See Florida Statute 720.3085. During the court process, the homeowner will have an opportunity to raise defenses and challenge the foreclosure. T

The court process can move quickly if timely action is not taken to fight the HOA. If foreclosure proceedings have begun, contact a foreclosure defense attorney right away. There may be legal defenses that can be used to prevent the foreclosure of your home. Additionally, there may be other options available to stop the HOA foreclosure.

HOA Foreclosure for Late Fees

HOA’s are allowed to add interest, legal fees, and late fees under Florida law. In most homeowner’s association foreclosure cases, the number of attorney’s fees charged by the HOA will be far in excess of the amount of HOA dues owed. In some cases, the attorney’s fees are more than 3 times the amount of the past due HOA fees. However, if your foreclosure defense lawyer is successful in getting the case dismissed the HOA may be held responsible for reimbursing you for your attorney’s fees. See Florida Statute 57.105.

Required Notice for an HOA Lien

Under Florida Statute 720.3085, before a homeowners association foreclosure case can be filed the HOA must provide the homeowner with proper notice. Florida law requires the HOA to send notice to the homeowner of their intent to record a lien. Their notice must be sent at least 45 days prior to recording the lien. The notice must include details of the amount owed and an opportunity to pay the amount before filing foreclosure. The notice must meet all the requirements outlined in the Statute. For information regarding a specific notice contact an HOA foreclosure defense attorney for legal advice.

Notice of Intent to File HOA Foreclosure

Florida foreclosure law requires the HOA to send the homeowner notice of their intent to foreclose on the lien. This notice must be sent at least 45 days before filing for a homeowners association foreclosure. The notice of intent to foreclose the lien should be sent after the HOA files their lien for fees. If the HOA does not send the homeowner both the notice of their intent to record a claim of lien and notice of intent to foreclosure on the lien they should not be entitled to foreclosure.

Both notices are required to be sent by registered or certified mail with a return receipt. See Florida Statute 720.3085(4)(b). The notices must be sent to the address of the property they are intending to foreclose. If the property owners do not live in the home the HOA must send the notices to both the homeowner’s mailing address and the property address.

Will Chapter 13 Bankruptcy Stop an HOA Foreclosure?

When a homeowner files for bankruptcy an automatic stay is issued. The stay goes into effect immediately after a Chapter 7 or Chapter 13 bankruptcy is filed. The automatic stay will put an immediate stop to an HOA foreclosure in Florida. The automatic stay requires all collection activity against the debtor to stop immediately, including a foreclosure sale that has already been scheduled. For more information on the automatic stay click here.

Eliminate HOA Fees in Bankruptcy

Under bankruptcy law, HOA fees may be discharged in Chapter 7 or Chapter 13 bankruptcy. However, determining the amount that will be discharged requires careful consideration by an experienced bankruptcy lawyer. Generally, HOA fees that have been incurred prior to the order of relief will be eligible for discharge. However, bankruptcy law will not permit the discharge of HOA fees incurred for any period after the order for relief has been entered and the debtor still retains either a possessory or legal interest in the property.

If a debt is discharged in bankruptcy the borrower will be released from all personal liability on the debt. The discharge is a permanent court order releasing the borrower from the responsibility of having to pay the debt. Further, the discharge prohibits a creditor from taking any collection action against the borrower.

Chapter 13 to Remove HOA Liens on Your Home

Under chapter 13 bankruptcy law, junior liens (including mortgages or a homeowner’s association liens) can be stripped, or removed from homestead property. If the lien is stripped down to the market value, the remaining balance of the debt will be treated as an unsecured debt in bankruptcy. Unsecured creditors typically receive nothing or only a small amount of the balance before being discharged.  Further, after the discharge is granted, the HOA will be required to remove the lien from the property.

How to Force the HOA into a 5-Year Payment Plan

A Chapter 13 bankruptcy can allow a homeowner to force the HOA into a five-year payment plan. Essentially, the homeowner will have a 60-month loan to repay the back-due HOA fees, regardless of if the HOA approves it or not. Most of the time, the interest rate applied to these types of payment plans is around 6%. The rate of interest under a Chapter 13 plan is often less than the rate an HOA may charge. For more information about a specific case or payment plan contact a Tamp bankruptcy lawyer to schedule a consultation.

Consult Bankruptcy & Foreclosure Defense Law Firm

If you being threatened with an HOA foreclosure in Florida contact Florida Law Advisers, P.A. our Tampa foreclosure attorneys are experienced in both bankruptcy and foreclosure defense. Every foreclosure and bankruptcy case is different, and our vast experience allows us to cater our services to each client’s individual needs. All of our initial consultations are free and convenient payment plans are always available. Regardless, if you need help HOA foreclosure in Florida, Chapter 7, or Chapter 13 we can help. Call us at 800 990 7763 to speak with a lawyer, we are available to answer your calls 24/7.

Florida Bankruptcy Law: What Is An Automatic Stay? Stop Creditor Harassment

The automatic stay in Chapter 7 and Chapter 13 bankruptcy is one of the most important tools available to borrowers. The automatic stay requires all collection activity against borrowers to stop immediately after a case has been filed. Creditors and collection agencies will not be able to pursue any collection actions when the stay is in effect. The automatic stay even stops garnishments and foreclosure auctions already scheduled to occur. For more information about the automatic stay or bankruptcy contact a Tampa bankruptcy attorney to schedule a consultation.

How Long Does the Automatic Stay Last?

In most cases, the automatic stay will remain in effect until your bankruptcy case is discharged. The automatic stay is available under both Chapter 7 and Chapter 13 bankruptcy. Typically, the stay is automatically lifted for all creditors once your case is closed. See bankruptcy case  Failla v. Citibank.

If a secured creditor wants to move forward with collection efforts after the stay has been enacted, the creditor must first seek approval from the bankruptcy court. This process will require notice to you (the debtor) and a court hearing. See U.S. Supreme Court Case: Citizens Bank of Maryland v. Strumpf. The automatic stay will prevent creditor harassment until it is lifted by a judge. If the judge grants the secured creditor the ability to move forward with their collection after the hearing, the automatic stay is considered to be “lifted” and collection efforts may resume.

Phone Calls & Notices From Creditors

Based on the legal tradition that parties represented by a lawyer cannot be contacted directly by the opposing party, the automatic stay ensures that only a judge can lift the automatic stay. Thus, the entire time a legitimate bankruptcy proceeding is going on, your creditors can no longer call, send you bills or notices, or otherwise contact you regarding the debt. Further, the automatic stay should remain in effect throughout the case. Only if a creditor obtains relief from the stay by a judge can collection actions resume during an active Chapter 7 or Chapter 13 bankruptcy.

Can a Bankruptcy Stop a Foreclosure Sale?

If there is an active foreclosure, the automatic stay will freeze the foreclosure as soon as the bankruptcy is filed. As long as the bankruptcy case is filed before the foreclosure action, the automatic stay will cancel the sale. Even if you file five minutes before the scheduled auction the foreclosure will be canceled.

It is important to make sure that once you file your bankruptcy petition to stop the foreclosure that you also file a “Suggestion of Bankruptcy” in the foreclosure lawsuit right away. This assures that the state court judge is on notice of your bankruptcy, so the foreclosure can be stopped on time. The Tampa bankruptcy law firm you hired should file the suggestion of bankruptcy in your foreclosure case on your behalf.

Will Bankruptcy Stop a Car Repossession?

The automatic stay is a common solution for borrowers seeking to stop car repossession in Florida. The automatic stay forces creditors to cease all collections attempts, include car repossessions. In this situation, timing is everything. If you expect to soon default on a car loan and need help with stopping repossession in Florida, it Is important to speak with a Tampa bankruptcy lawyer before your car is repossessed. Waiting too long to get started on the automatic stay may decrease the chances it can help. If the creditor obtains possession of the car before the bankruptcy is filed the automatic stay will not help to get the car back, it only prevents a creditor from taking the car.

What is the Quickest Way to Stop a Wage Garnishment?

The automatic stay is often the quickest way to stop a wage garnishment. Unlike the head of household exemption, you do not have to wait weeks or months to stop the garnishment. Instead, the garnishment must be stopped as soon as the bankruptcy case is filed. Conversely, the head of household process requires borrowers to wait for a court hearing in which a judge orders the garnishment to be stopped.

Automatic Stay Exceptions

The automatic stay does not apply to all types of debts and collection activities. A list of some of these automatic stay exceptions is below, for a more complete list see bankruptcy  11 USC §362 or contact a Tampa bankruptcy lawyer.

  1. Family support obligations: Many different forms of family support obligations will qualify for an automatic stay exception. For instance, child support payments and child custody cases are all exempt from the stay.
  2. Criminal court cases: The automatic stay will not delay or cancel the beginning or continuation of a criminal case. Bankruptcy is intended to address a debtor’s financial distress, not criminal activity. However, if the criminal prosecution is primarily based on debt collection the automatic stay may be placed on the criminal case. For instance, if the criminal prosecution is based on the debtor writing a bad check the bankruptcy stay may be enforced in the criminal case. See In Re Dovell.
  3. Tax bills: Demands for tax returns, and payment of taxes are eligible for an automatic stay exception. However, tax liens that would attach to the property of the bankruptcy estate will not take effect unless the debt is ineligible for a discharge and the property is transferred out of the estate or revested in the debtor.
  4. License suspension: The automatic stay will not prevent the debtor from attempting to reinstate a driver’s license that was suspended for reasons related to debt collection. However, license suspensions related to criminal proceedings will not be stayed subject to the automatic stay. See In Re Games.

How to Avoid an Automatic Stay Exception

Even though a debt is listed in the statute as being eligible for an automatic stay exception, the debtor may still be able to convince a court to pause the collection action and enact a stay. Bankruptcy courts are courts of equity. Therefore, the judge should consider the fairness of the relief sought, as opposed to just the strict rules of law.  Further, under Bankruptcy law 11 USC 105, the judge has the authority to issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of the law. The overriding principle behind bankruptcy is to give debtors a fresh start.  In some cases, an automatic stay exception can frustrate the purpose of debtors achieving a fresh start.

Questions? Contact a Tampa Bankruptcy Law Firm Today!

At Florida Law Advisers, P.A., the Tampa bankruptcy attorneys have years of experience helping people solve their financial problems. We understand that these are very difficult times and we are here to help. We have many options available that can help you successfully manage your debt and regain your financial health. The right course of action will depend on the unique circumstances of your case. To see which options may be available, contact us to schedule a free consultation with a Tampa bankruptcy lawyer.