When an individual files bankruptcy he or she is frequently behind on mortgage payments and or homeowner association dues. The amount owed on these particular debts are discharged in bankruptcy, which means the homeowner cannot be forced to pay them; however the mortgage company and the homeowners association do maintain a lien on the property for the amount owed. This means these creditors have to be paid out of the sales proceeds when the house is eventually sold before the homeowner receives anything. Or in the case of a mortgage company, they can foreclose on the house and take it away from the owner if the mortgage is not paid.
In the case of homeowner association dues there is the additional restriction, that the dues are only discharged if they were incurred before the bankruptcy was filed. The association can go to court and enforce payment for dues that fall due after the bankruptcy filing. This may sound reasonable for a person who continues to occupy the house, but if an individual finds a job in another state and is forced to move this can be a burden, especially if he cannot sell the house and it ends up being foreclosed on. In the current economic environment foreclosures often require a couple of years to work their way through the courts, and all this time association dues can be mounting up.
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