Bankruptcy and HOA Assessments

Section 1: Overview — What an owner's bankruptcy changes

When an owner of a unit or lot subject to association assessments files for bankruptcy, the automatic stay of 11 U.S.C. § 362(a) stops collection the moment the petition is filed, and no court order is required.¹ The stay halts demand letters, calls, statements that operate as demands, lawsuits, judgment enforcement, and the creation or enforcement of a lien against the debtor and estate property. Bankruptcy rarely erases an association's position in full. Title 11 of the United States Code governs, and the provisions that decide most association questions are § 362 (the stay), § 523(a)(16) (nondischargeability of certain association fees), § 727 (chapter 7 discharge), § 1328(a) (chapter 13 discharge on plan completion), § 546(b) (post-petition perfection), and § 501 with Federal Rule of Bankruptcy Procedure 3001 (proofs of claim). In a chapter 7 case, § 523(a)(16) excepts from discharge assessments that become due after the order for relief for as long as the debtor or the trustee holds a legal, equitable, or possessory ownership interest in the unit.² Chapter 13 diverges: in Goudelock v. Sixty-01 Ass'n of Apartment Owners, No. 16-35384 (9th Cir. July 10, 2018), the Ninth Circuit held that post-petition assessments arising from a pre-petition covenant are discharged on completion of a plan under § 1328(a), a result courts outside the Ninth Circuit have not reached uniformly.³ A perfected assessment lien survives discharge and remains enforceable in rem against the unit. A stated intention to surrender does not move title, so assessments keep accruing against the owner until a sale, deed in lieu, or foreclosure completes. The sections that follow set out the framework, the operational map, and recent activity.

Section 2: The statutory framework

2A. The automatic stay and its exceptions

The filing of a petition under 11 U.S.C. § 362(a) operates as a stay applicable to all entities, and no court order is required for it to take effect.¹ For an association, the stay reaches the commencement or continuation of a suit that arose before the case, the enforcement of a pre-petition judgment, any act to obtain or exercise control over estate property, any act to create, perfect, or enforce a lien against estate property, and any act to collect or recover a pre-petition claim. Demand letters, collection calls, and account statements that function as demands fall within these categories when they seek a pre-petition debt. The stay binds a creditor even when it acts in ignorance of the filing, and § 362(k)(1) authorizes an individual debtor injured by a willful violation to recover actual damages, including costs and attorneys' fees, and, in appropriate circumstances, punitive damages.⁴

Whether suspending amenity access, deactivating a gate transponder, revoking parking, or withdrawing voting privileges as pressure on a delinquent owner violates the stay remains an open question. The analysis turns on whether the suspension is an act to collect a pre-petition claim under § 362(a)(6) or the exercise of a governing-document right independent of the debt. No located, controlling decision resolves the point, and the answer a court reaches depends on the facts and the governing documents.

Section 362(b)(3), read with § 546(b), permits an act to perfect or continue perfection of an interest in property to the extent that applicable law gives that interest priority over an intervening interest.⁵ Whether an association may record or continue an assessment lien after filing therefore depends on whether state law supplies relation-back or automatic-lien treatment, and that question belongs to the state Collections & Liens columns. Section 362(d) allows a party in interest to obtain relief from the stay for cause, including a lack of adequate protection, or as to specific property in which the debtor lacks equity that is not necessary to an effective reorganization.⁶

2B. Discharge, dischargeability, and the chapter divide

Three concepts must stay separate. A claim is a right to payment. Personal liability is the debtor's in personam obligation to pay it. A lien is an in rem interest in the property that secures the claim. A discharge eliminates personal liability; it does not, by itself, eliminate a lien.

Chapter 7. A discharge under § 727 relieves an individual debtor of personal liability for most pre-petition debts, including pre-petition assessment arrears that are not secured.⁷ Section 523(a)(16) is the exception that matters to associations: it excepts from discharge a fee or assessment that becomes due and payable after the order for relief to a membership association with respect to the debtor's interest in a unit that has condominium ownership, a share in a cooperative, or a lot in a homeowners association, for as long as the debtor or the trustee holds a legal, equitable, or possessory ownership interest in the unit.² Congress added the subsection in 1994 and broadened it in 2005 through BAPCPA, which extended it beyond condominiums and cooperatives to homeowners association lots and removed the earlier conditions that had required the debtor to occupy the unit or collect rent from it. Pre-petition arrears remain outside the exception.

Chapter 13. The court enters the full discharge under § 1328(a) after the debtor completes all plan payments, and by its terms § 523(a)(16) does not reach it: that exception applies to the hardship discharge under § 1328(b), not to the completion discharge under § 1328(a).⁸ In Goudelock, the Ninth Circuit held that a debtor's personal obligation for post-petition assessments arises from the pre-petition covenant taken on at purchase, is therefore a pre-petition claim, and, in the court's words, "such assessments are dischargeable under 11 U.S.C. § 1328(a)" on completion of a chapter 13 plan; the court added that the discharge does not reach the in rem lien.³ Goudelock is the rule in the Ninth Circuit. It adopted the Seventh Circuit's Rosteck reasoning while expressly disagreeing with the Fourth Circuit in In re Rosenfeld, 23 F.3d 833 (4th Cir. 1994), and courts outside the Ninth Circuit have not reached uniform results, so the current landscape requires verification in the governing jurisdiction.

Chapter 11 and chapter 12. For individual debtors, the § 523(a)(16) exception also reaches the discharge under § 1141 (chapter 11) and the discharges under § 1228(a) and (b) (chapter 12), so those cases except post-petition assessments from discharge while the ownership interest continues.² Throughout any case, pre-petition arrears and post-petition assessments are separate categories, and the ledger must track them separately.

2C. Claims, liens, and case administration

An association asserts its pre-petition arrears by filing a proof of claim under § 501 and Federal Rule of Bankruptcy Procedure 3001.⁹ Rule 3001 requires a claimant to file a copy of the writing when the claim, or an interest in property securing the claim, is based on a writing, and to accompany a claimed security interest with evidence of perfection; a proof of claim executed and filed under the rules is prima facie evidence of the claim's validity and amount.¹⁰ Bar dates come from the rules and the court's notice in the specific case: Rule 3002(c) makes a claim in a voluntary chapter 7, 12, or 13 case timely if filed within 70 days after the order for relief, while the court fixes a chapter 11 bar date, so the operative deadline must be read from the notice in the case rather than assumed.¹¹

Classification as secured, unsecured, or priority turns on whether a lien exists, whether it is perfected, and whether there is value to support it; an assessment claim is secured only to the extent of the value of the association's interest in the unit, and unsecured for any remainder. In chapter 13, valuation and lien-treatment questions can arise, but whether a court may avoid, value, or modify an assessment lien depends on the lien's character under state law, the debtor's exemptions, and the chapter, and no uniform anti-modification or stripping rule can be stated here; that analysis belongs to the state Collections & Liens columns. Where the stay blocks a step the association needs, the route is a motion for relief from the stay under § 362(d).⁶ At the close of a case, what survives is the in rem lien if it was perfected, any nondischargeable personal obligation under § 523(a)(16), and nothing more.

Section 3: What associations can and cannot do when an owner files

A. Day one

Once notice of a filing arrives, the association must stop collection letters, calls, and statements that function as demands for a pre-petition debt, halt any suit and any lien foreclosure, and refrain from enforcing a judgment, because § 362(a) stays each of these acts automatically.¹ Route communications to counsel and flag the account as in bankruptcy. Whether routine periodic statements and post-petition invoices may continue depends on what the account is billing: a demand for a pre-petition balance implicates the stay, while a bill for a genuinely post-petition, non-discharged obligation raises different questions that deserve review before any statement issues.

B. Preserving the claim and the lien

File a proof of claim for the pre-petition arrears with the documentation Rule 3001 requires, and read the bar date from the court's notice rather than assuming a universal deadline.¹⁰ Whether the association may record or continue an assessment lien after filing turns on § 362(b)(3) and § 546(b) and on whether state law gives the lien relation-back or automatic priority; where that exception does not apply, a motion for relief from the stay under § 362(d) is the route to lien enforcement, and the specifics of lien priority belong to the state Collections & Liens columns.⁵

C. Accounting during the case

The ledger must carry pre-petition arrears and post-petition assessments as separate line items, because discharge and stay rules treat them differently.² Late fees, interest, and attorney fees accruing during the case follow the category of the underlying charge and the limits of state law and the governing documents, and their treatment deserves confirmation rather than assumption. A single running balance that blends pre- and post-petition amounts creates both stay exposure on the pre-petition portion and proof-of-claim problems, so associations should avoid it.

D. After discharge or dismissal

In chapter 7, post-petition assessments remain the owner's personal obligation under § 523(a)(16) for as long as the debtor or trustee holds an ownership interest in the unit.² In chapter 13, the completion discharge under § 1328(a) may reach the personal obligation for post-petition assessments in jurisdictions that follow Goudelock, but not elsewhere, so the result requires verification.³ A unit that the debtor stated an intention to surrender but that has not been sold, deeded, or foreclosed remains in the debtor's name, and assessments accruing in that gap remain the owner's obligation. A perfected lien survives and remains enforceable in rem after the case, and if the court dismisses the case rather than granting a discharge, the stay ends and collection may resume subject to state law.

Section 4: Recent litigation, rules, and legislative activity

A. Recent court decisions

Goudelock v. Sixty-01 Ass'n of Apartment Owners remains the controlling appellate authority on the chapter 13 question, and as verified on July 28, 2026, no later court of appeals decision resolves the split it identified. It appears here as the anchor precedent rather than as a new decision.

B. Rules and administrative changes

C. Legislation and active debates

The Consumer Bankruptcy Reform Act, which would replace chapters 7 and 13 with a single individual chapter, was introduced December 18, 2024 by Senator Elizabeth Warren (for herself and Senator Sheldon Whitehouse) as S. 5577, with a House companion, H.R. 10500. The bills received no vote and were cleared at the end of the 118th Congress, and as verified on July 28, 2026, no 119th Congress version had surfaced.¹⁶ The Bankruptcy Administration Improvement Act of 2025, which addresses trustee compensation and bankruptcy judgeships rather than the treatment of association claims, advanced in the 119th Congress through S. 1659 and companion measures.¹⁷ Its companion S. 3424 was signed into law on February 6, 2026 as Public Law 119-76 and, per the White House statement, increases chapter 7 trustee fees, extends chapter 11 quarterly fees for five additional years, and extends certain temporary bankruptcy judgeships for five additional years.¹⁸

Section 5: Interaction with state law and related coverage

Bankruptcy is federal, but state law sets the value of an association's position in a case. Whether the assessment lien arises automatically or requires a recorded claim of lien, whether it relates back to an earlier date, whether it primes a first mortgage in whole or in part, and what the debtor may claim as exempt are all questions of state law, and they decide how much the association actually recovers. The same petition can produce different outcomes for two associations in different states because their liens differ, not because the Bankruptcy Code differs. Readers tracing a specific account should turn to the state Collections & Liens, Foreclosure, and Assessment Limits columns for lien mechanics and priority, and to the sibling federal money pages for the collection and servicemember overlays.

HOA Weekly's federal bankruptcy coverage updates quarterly as the courts and the rules committees act. State lien priority, superlien status, and foreclosure procedure appear in the Collections & Liens and Foreclosure columns of the state matrix.

Footnotes

1. 11 U.S.C. § 362 (automatic stay; § 362(a) enumerated acts) ↩
2. 11 U.S.C. § 523(a)(16) (nondischargeability of certain association fees and assessments; applies to discharges under §§ 727, 1141, 1228(a), 1228(b), and 1328(b)) ↩
3. Goudelock v. Sixty-01 Ass'n of Apartment Owners, 895 F.3d 633 (9th Cir. 2018), No. 16-35384 (official Ninth Circuit opinion) ↩
4. 11 U.S.C. § 362(k)(1) (actual and punitive damages for willful violation) ↩
5. 11 U.S.C. § 546(b) (rights of lienholder whose interest relates back), applied through 11 U.S.C. § 362(b)(3) ↩
6. 11 U.S.C. § 362(d) (relief from stay for cause and as to property without equity) ↩
7. 11 U.S.C. § 727 (chapter 7 discharge) ↩
8. 11 U.S.C. § 1328(a) (discharge on completion of chapter 13 plan payments) ↩
9. 11 U.S.C. § 501 (filing of proofs of claim) ↩
10. Federal Rules of Bankruptcy Procedure (Dec. 1, 2024), Rule 3001 (Proof of Claim) ↩
11. Federal Rules of Bankruptcy Procedure (Dec. 1, 2024), Rule 3002(c) (70-day time to file in voluntary chapter 7, 12, and 13 cases) ↩
12. Administrative Office of the U.S. Courts, Rules and Forms Amendments effective December 1, 2024 (restyled Rules Parts I–IX; amended Official Form 410) ↩
13. Amendments to the Federal Rules of Bankruptcy Procedure effective December 1, 2025 (Rules 3002.1 and 8006) ↩
14. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases, 90 Fed. Reg. 8941 (Feb. 4, 2025), effective April 1, 2025 ↩
15. 11 U.S.C. § 104 (automatic three-year adjustment of dollar amounts, at each three-year interval ending on April 1) ↩
16. S. 5577, Consumer Bankruptcy Reform Act of 2024, 118th Congress (introduced Dec. 18, 2024); see also H.R. 10500, 118th Congress ↩
17. S. 1659, Bankruptcy Administration Improvement Act of 2025, 119th Congress ↩
18. S. 3424, Bankruptcy Administration Improvement Act of 2025, 119th Congress (enacted as Pub. L. 119-76) ↩