POAs Benefit from Bush's new Bankruptcy Bill

Community Associations are marking their calendars for October 17th, 2005: that's the day that President Bush's Bankruptcy Abuse Prevention and Consumer Protection Act largely goes into effect. This bill basically makes it more difficult for homeowners to escape financial obligations as members of their respective community associations and allows for easier collection of debts by the associations.

The bill contains four main provisions which will benefit the community associations: (1) assessments and fees accumulated prior to a bankruptcy filing are still the responsibility of the homeowner and must be paid regardless if the property has been abandoned (under the old law, abandonment released the homeowner from liability for the accumulated debts); (2) credit counseling, finance educational courses and other administrative hurdles will make it tougher for homeowners to use bankruptcy as a financial escape hatch; (3) more bankruptcies will be treated as Chapter 13 reorganizations, thereby granting community associations a better chance to collect past due amounts; and (4) homestead protection has been limited in most cases to $125,000.00, and applies even in states where a broader homestead protection exists.

For a more in-depth examination of this bill, see the article posted here. Thanks to the Community Association Management Insider and Laura White Brandow and Jim Judge who authored this article.