Does Bankruptcy Discharge HOA Fees in Michigan?

Homeowner Association (HOA) and Condo Association (COA) fees can feel like an inescapable burden when you are already struggling with debt. For Michigan homeowners considering bankruptcy, a crucial question is whether filing for Chapter 7 or Chapter 13 will finally wipe out these ongoing assessments.

The Short Answer for Michigan Debtors:

Yes, Chapter 7 bankruptcy can discharge your personal liability for past-due HOA or condo fees that came due before you filed your case (pre-petition debt). However, under U.S. Bankruptcy Code 11 U.S.C. § 523(a)(16), fees that come due after you file (post-petition debt) are generally not discharged for as long as you legally own the property, even if you intend to surrender it.

In this article, I’ll explain how the rules work, what they mean for people who plan to keep their homes versus those who plan to surrender, and practical strategies for stopping collections, protecting equity, and getting to a clean slate.

Explainer graphic for HOA fees in a Michigan bankruptcy with timelines and chapters

The Core Rule: Pre-Petition vs. Post-Petition HOA Debts

The distinction between when the debt arose is the single most important factor in determining how your HOA or condo fees are treated in bankruptcy.

1. Understanding “Pre-Petition Debt”

Definition: Any fees, fines, or special assessments that became due and payable before the exact moment you file your Chapter 7 or Chapter 13 petition are considered pre-petition debts.
Treatment: These debts are treated like most other unsecured debts, such as credit card bills or medical expenses. In a successful Chapter 7 case, your personal obligation to pay these back fees is discharged (wiped out). In Chapter 13, they are bundled into your repayment plan and usually paid back at a reduced rate.

2. The Problem of “Post-Petition Assessments” (11 U.S.C. § 523(a)(16))

This is the provision in federal bankruptcy law that protects HOAs and COAs. It states that an individual’s bankruptcy discharge does not discharge debt for a fee or assessment that becomes due and payable after the order for relief (the filing date), for as long as the debtor retains a legal, equitable, or possessory interest in the unit.

This means your obligation to pay the monthly fees is ongoing, regardless of the bankruptcy filing, until the property is completely out of your name.

Chapter 7 Bankruptcy and Michigan HOA Fees: The “Timing Trap”

Many Detroit and West Michigan residents file Chapter 7 bankruptcy specifically to surrender a home they can no longer afford. While the filing relieves them of the mortgage debt, it often creates a new, unexpected liability with the HOA.

The Discharge of Arrearages

When you successfully complete your Chapter 7 case:

Mortgage Discharge: Your personal obligation to repay the mortgage is gone.
HOA Arrearage Discharge: Your personal obligation to pay the old, pre-petition HOA fees is gone.

Why You Must Pay Post-Petition Fees Until Title Transfers

The discharge only applies to debts incurred up to the filing date. Your HOA/COA documents create a covenant running with the land, meaning the obligation to pay the monthly fees is tied to property ownership, not just the debt itself.

If you file bankruptcy and tell the court you plan to “surrender” the property, you still retain legal title until one of two things occurs:

The Mortgage Lender Forecloses: The bank must successfully complete a foreclosure sale, and the statutory redemption period (often six months in Michigan) must expire.
You Execute a Deed in Lieu of Foreclosure: You voluntarily sign the title over to the bank, and the bank accepts it.

If the mortgage lender delays foreclosure for months or even years—a common scenario after the housing crisis—the HOA fees continue to accrue, and you remain personally liable for every single month’s assessment during that delay period.

Chapter 13 Reorganization: Paying HOA Fees Through Your Plan

Chapter 13 bankruptcy, a wage earner’s plan, offers a more structured way to manage HOA fees, particularly if you plan to keep your home or unit.

Handling Pre-Petition Arrearages in the Plan

If you plan to keep your home or condo:

The past-due fees (arrearages) owed to the association are typically treated as a secured or priority unsecured claim within your Chapter 13 repayment plan.
These arrearages will be paid off over the 3-to-5-year life of the plan.

The Requirement to Pay Ongoing Assessments

If you keep the property, you must pay all current (post-petition) assessments directly to the HOA or COA outside of the Chapter 13 plan. These payments must be made on time, every month. Failure to stay current can lead to the association filing a Motion for Relief from the Automatic Stay, which could allow them to restart collection efforts against you or the property, regardless of your Chapter 13 plan.

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The Critical Threat: HOA Liens Survive Bankruptcy in Michigan

Even when bankruptcy discharges the personal obligation to pay pre-petition fees, the association’s lien on the property itself survives the bankruptcy filing.

The Difference Between Personal Liability and the Property Lien

Personal Liability: Your legal duty to pay the debt (discharged in Chapter 7 for pre-petition fees).
Property Lien: The security interest the association holds against the title of the property.

In Michigan, HOA and COA liens are powerful. When a personal debt is discharged, the lien remains. This means that if you choose to keep the property, or if a lender delays foreclosure:

Can the Association Foreclose on the Lien?

Yes. The HOA/COA can wait for your bankruptcy to close and then move forward with its own foreclosure action against the property to collect on the amounts secured by its lien (which can include the past-due fees, late fees, and legal costs). This is especially critical for condo owners, as the state law favors the association.

This is why, even if you are current on your mortgage, the HOA could force a foreclosure sale of your unit.

Need Help Navigating Bankruptcy and HOA Debt in Michigan?

The rules governing HOA and condo fees in Chapter 7 and Chapter 13 are some of the most complex in the U.S. Bankruptcy Code, and misunderstanding them can result in tens of thousands of dollars in post-bankruptcy debt.

If you are a Michigan homeowner dealing with overwhelming HOA or COA fees, you need personalized, experienced legal guidance.

Don’t risk your financial fresh start. Contact Kostopoulos Bankruptcy Law today for a confidential consultation.

Call us now at 877‑969‑7482 or request a consultationto learn more about protecting your assets and achieving debt relief.

Disclaimer: This article provides general information about bankruptcy law and HOA fees in Michigan and should not be construed as legal advice. Every situation is unique, and you should consult with a qualified attorney to discuss the facts of your individual case.

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Does a Chapter 7 bankruptcy completely eliminate my HOA or condo association fees in Michigan?

No, a Chapter 7 bankruptcy only discharges your personal liability for fees and assessments that became due before the date you filed the petition (pre-petition debt). Any fees that accrue after the filing date (post-petition debt) are generally not discharged, pursuant to 11 U.S.C. § 523(a)(16), for as long as you retain legal title to the property.

If I surrender my home in Chapter 7, am I still responsible for post-petition HOA fees?

Yes. Stating your intention to "surrender" the property in bankruptcy does not automatically transfer legal title. You remain personally liable for all HOA or condo fees that come due after your filing date until the property is officially transferred out of your name—typically through a foreclosure sale by the mortgage lender or an accepted Deed in Lieu of Foreclosure.

Does the HOA’s lien for unpaid fees survive a bankruptcy discharge in Michigan?

Yes, the HOA or condo association's lien on the property itself survives both Chapter 7 and Chapter 13 bankruptcy. While the bankruptcy may eliminate your personal obligation to pay the pre-petition debt, the lien remains attached to the property. This means the association can still enforce the lien later, potentially through a judicial foreclosure sale, even if the mortgage is also underwater.

How do I handle ongoing HOA fees if I keep my home in a Chapter 13 bankruptcy?

If you elect to keep your home in a Chapter 13 plan, the plan will address the pre-petition arrearages (past-due fees), paying them off over the 3-to-5-year term. However, you are separately required to make all current monthly HOA or condo assessments directly to the association on time. Failure to pay current fees could result in the association asking the bankruptcy court to lift the automatic stay.

Can a Michigan HOA foreclose on my property if my personal debt was discharged in bankruptcy?

Yes, an HOA or COA can pursue a non-judicial or judicial foreclosure on the property to enforce its surviving lien. Even if your personal debt for the fees was discharged, the lien itself is an encumbrance on the property. If you fail to pay the fees that accrue after the filing date or the debt secured by the surviving pre-petition lien, the association can move to foreclose on its interest in the property.