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                    is important when evaluating the debts that can be        for bankruptcy, called “pre-petition,” can be wiped out or what is formally known as “discharged.” Generally, debts incurred after the debtor has started his or her case, called “post-petition,” are not discharged in the bankruptcy.


The types of bankruptcy are called “chapters” as a reference to the chapter in Title 11 of the United States Code where each type is established. The most common types of bankruptcy for individuals, and therefore those that associations will normally deal with, are Chapter 7 and Chapter 13.


Chapter 7 (called the “simple bankruptcy”) is for individuals with little to no disposable income. A Chapter 7 discharge wipes out most debt. Exceptions include taxes, child support, alimony, student loans, etc. In this type of bankruptcy, the debtor surrenders non-exempt property, including real estate owned, to the trustee of the bankruptcy court to sell. The trustee will then apply the proceeds towards debts. Remaining debts are then discharged. This process takes between four and six months if the debtor consistently follows the trustee’s requirements and timelines.


Chapter 13 (called “wage earner bankruptcy”) allows individuals to retain all of their property, but use their disposable income to develop a repayment plan of    the debtor completes the plan, the debts included in the plan are cancelled.


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When approving a payment plan, the court gives priority to secured debts, such as car payment, mortgages, lienholders, over unsecured debts, such as credit cards and personal loans. For the purposes of bankruptcy, it is important to understand that there are two types of debt, secured and unsecured. In the homeowners association arena, a secured debt takes the form of a recorded assessment lien which secures the debt against the owner’s property.


If a homeowner systematically


  efforts or attempts to fraudulently transfer title, partial or complete, the association can obtain relief that allows it to take legal action towards a property rather than toward a particular person. The courts call this right “in rem.” Unsecured debts, such as assessments without a lien, make the debtor personally liable for payment, but do not provide any collateral rights. Courts call this “in personam.” Associations have both in personam and in rem rights.


        all collection proceedings on the debts included in the case. This is called an “automatic stay.” Failing to           a court order requiring the entity or person to return foreclosed property or pay damages to the debtor.            for relief from the automatic stay to proceed with its collection efforts or foreclosure.


In 2018, the United States Ninth Circuit Court of Appeals, which presides over and decides case law for California, decided Goudelock v. Sixty-01 Association of Apartment Owners, holding that assessments that become due after


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