After your hearing with the bankruptcy trustee–called the “meeting of creditors”–here are two things you need to know. Pay the car payment, if you want to keep the car. Pay the HOA–even if you aren’t keeping the house.
First, make sure you are making the car payment, if you want to keep the car. They will not bill you. Because of the bankruptcy, sending you a bill is trying to collect the debt. And they are not allowed to try to collect the debt. They will however repossess the car if you don’t pay. So make sure you are current and stay current.
(If you were set up on an automatic payment, that has probably been turned off. Check and be sure.) If they are not receiving the payment, they will not call and yell at you. They will repossess your car.
After the 2005 change in the law, they can repossess your car even if you are current. The people who actually do that are Ford Credit, Chrysler Credit, and SunTrust. (Mazda is part of Ford.)
(Most states have state laws that block them from repossessing if you are current; but this is Virginia. Virginia has the worst consumer protection laws of any of the fifty states. Seriously.)
Talk to me about reaffirmation if you have Ford, Chrysler or SunTrust.
Second, make sure you are paying the homeowners or condo association. Your bankruptcy means they cannot go after you for what you owed before your case was filed. But your next month’s association fee is an after bankruptcy debt. So is the one after that and the one after that. The bankruptcy court is not paying those. You need to. (If you have not paid between your filing date and the date of your hearing, you are probably already one payment behind.)
You owe the condo and HOA fees for as long as you own the house. That’s usually three or four months after the bankruptcy is filed and sometimes it’s six or eight. Especially when the condo fees are high, and there are already bank-owned condos in your development, the mortgage company is in no hurry to foreclose. See my blog on “how long after bankruptcy can I keep my house?”
(The mortgage company doesn’t want to be paying the condo fees on an empty place–they’d rather you do it. If you know there are a lot of empty units in your condo, think about renting yours, if you’ve already moved out. Rent it on a month-to-month, obviously.)
When are you able to stop paying? When there’s a foreclosure sale. You’ll get notice by certified mail. (They don’t send those to me, once the bankruptcy is over, I’m not involved. They send them to you.) Here’s what one looks like.
It would be a good idea to send notice of the sale to your association, so they do not continue to bill you once there is a foreclosure.
The situation with HOA’s and condo associations is so bad, I have one person in my office assigned to it. It’s Laura Jones, at (703) 962-1043. I gave her this job in part because she is a Realtor, on the side.
Problems constantly crop up. Sometimes the associations apply your payments to pre-bankruptcy debts. They can’t legally do that. Sometimes they keep billing after the foreclosure finally goes through. They can’t do that either.
But often, people aren’t making the association payments. People say, I gave my house to the bankruptcy court. Why do I still have to pay? Answer, the bankruptcy court didn’t want it–they gave it back to you.
So, if you had stopped paying the HOA before the bankruptcy, you need to start paying once the bankruptcy is filed. I know that seems strange, but there it is. Pay the HOA.