Most people have a basic understanding of the difference between a chapter 7 bankruptcy and a chapter 13. Simply put, in a chapter 7 case, most debtors are not paying anything to creditors. In contrast in a chapter 13 case, there is a repayment plan of at least some of the debt. Generally, the knee-jerk reaction by someone contemplating bankruptcy is to try to avoid a chapter 13. But, there are instances where a chapter 13 has advantages not found in a chapter 7.
Post-Petition Condo Fees Do Not Need to be Repaid
One such advantage is the avoidance of condo or home owners' association fees. An individual debtor filing for chapter 7 relief cannot escape any debt for 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, in a share of a cooperative corporation, or a lot in a homeowners association. 11 U.S.C. § 523(a)(16). A chapter 13 discharge is broader than that granted an individual debtor under chapter 7, 11, or 12 and does not exclude post-petition home owner association dues. The nondischargeability exception under § 523(a)(16) does not apply in Chapter 13 cases except in the rare instances when a debtor who is unable to complete payments under a plan is granted a so-called 'hardship discharge' under § 1328(b) of the Bankruptcy Code.
This is just one instance of how complex and varied different types of bankruptcy can be. To get advice for your specific financial situation, contact our New Jersey personal bankruptcy lawyers for a free bankruptcy consultation today!