Short-Term Rentals, HOA Fines, and Foreclosure: Solving Vegas Property Debt Through Chapter 13

Las Vegas is a unique city in many aspects. Because of the iconic strip, we rely more on tourism, with a significant portion of our population working in the entertainment and hospitality industries. This, in turn, has an effect on our housing market. Short-term rentals such as Airbnbs are popular investments due to how many people choose Las Vegas for group vacations. For more permanent residents, their income can vary with fluctuations in tourism, making it easier for them to fall behind on mortgage payments. An HOA member can also face foreclosure if they fail to pay their dues. If a homeowner loses their home to foreclosure, their financial situation is about to get catastrophically worse. Filing for bankruptcy can pause that process and give the homeowner time to regain their footing. At the same time, bankruptcy should not be entered into without adequate research and preparation. Our Las Vegas law firm makes bankruptcy more approachable and affordable, with payment plan options starting as low as Zero Dollars Down. Schedule your free consultation today by calling 702-842-0700 for more information.

Solving Vegas Property Debt Through Chapter 13 Bankruptcy

HOA Dues and Home Foreclosure

It can be difficult to find a home to purchase that isn’t part of an HOA, or Homeowners Association. Some purposely avoid them because of the hassle and extra cost, while others appreciate the standards they set for the rest of the neighborhood. Either way, there are serious repercussions if a homeowner falls behind on their dues. Because these are attached to the property, they are secured debts. A creditor can repossess a secured asset when the individual doesn’t make their payments, and in this case, it would be their home. They will need some form of debt relief if they can’t afford to pay the past-due balance. Bankruptcy is one of the most powerful forms of debt relief available, but chapter 7 and chapter 13 operate far differently.

Secured debts can’t be cleared by chapter 7 bankruptcy, but they can be paid off in a chapter 13 bankruptcy payment plan. That payment plan lasts 3 years if household income falls below the state median, and 5 years if it is higher. The debtor will need to be able to demonstrate that they can afford their plan payments at a plan confirmation hearing. They will also need to attend a 341 Meeting of Creditors, which creditors have the right to attend to ask questions or make objections regarding the debtor’s bankruptcy case. There are several more requirements of a debtor filing for chapter 13 bankruptcy- read more on that below.

Regaining Control with Chapter 13 Bankruptcy

For a homeowner fighting to protect their residence from creditors, chapter 13 bankruptcy is often a more effective form of bankruptcy than chapter 7. When comparing 3 to 5 months to 3 to 5 years, chapter 13 gives the debtor far more time to resolve their housing-related debts. This can be crucial when creditors are attempting to repossess the home through foreclosure. Whether that’s a pending HOA foreclosure sale, a traditional home mortgage lender foreclosure proceeding, or another municipal or county collection action, chapter 13 can help.

There are limited strategies for avoiding a home foreclosure without bankruptcy. Most home foreclosures are due to failure to make mortgage payments, and the homeowner typically does not have those funds reserved for a lump-sum payment to stop a foreclosure. And many lenders are unwilling to work with borrowers who are delinquent on their payments. But they don’t have a choice whether or not to stop collections on a debtor who has filed a petition for bankruptcy. This is because of the automatic stay. The automatic stay goes into place once a petition for bankruptcy is filed, and generally lasts until the case is either discharged or dismissed. However, a creditor can request permission from the court to proceed with collection anyway with a motion for relief from the automatic stay. If granted, this motion gives that creditor alone the right to proceed with collection. This is a possibility if the debtor has missed several mortgage payments and it appears unlikely that they will be able to afford their payments after their debts have been discharged.

So what are the advantages of using chapter 13 bankruptcy to stop a home foreclosure? The primary advantage is that it gives a homeowner far more time to catch up on mortgage arrearages. Keeping up with current payments and paying off the past-due balance is much more realistic when that past-due balance is spread out over 3 or 5 years. This is also a longer amount of time to be protected by the automatic stay. But chapter 13 bankruptcy provides another unique benefit for homeowners struggling with debt. It also offers the chance to clear secondary home mortgages. If a debtor owes more on their home than its market value, a second mortgage can be discharged in chapter 13 bankruptcy. This process is also known as lien stripping. Confirm if your second home mortgage could be cleared in chapter 13 by speaking with a bankruptcy attorney. Schedule your free consultation with our Zero Down Vegas Bankruptcy firm by calling 702-842-0700.

Municipal Fines and Special Assessment Liens

These debts can either be treated as secured or unsecured debts. If they are unsecured, they may be eligible for discharge in chapter 7 bankruptcy. For a debtor who qualifies for both chapter 7 and chapter 13 bankruptcy, this can create a question of which would be more advantageous to file. That could depend on whether the rest of their debts are unsecured, or if they have secured debts that need addressing. If they are mostly secured or if the debtor isn’t eligible for chapter 7, that leaves chapter 13. Using chapter 13 bankruptcy here can help the homeowner avoid a tax or property sale. But the debtor will need to be able to pay off their municipal fines and/or special assessment liens within 3 or 5 years to qualify for chapter 13 bankruptcy. While some jurisdictions don’t require a home mortgage to be paid in full, these secured debts would need to be for chapter 13 eligibility.

Don’t Take the Risks that Come Along with Filing for Chapter 13 Bankruptcy Self-Represented. Contact Our Firm for Your Free Consultation Today.

It probably isn’t surprising that debtors tend to have better results when they hire representation rather than serve as their own bankruptcy attorney. Those who are successful tend to be chapter 7 debtors instead of chapter 13 debtors. And what happens when a bankruptcy filing goes wrong can be devastating. When assets aren’t protected with exemptions correctly, the trustee can sell them to pay back creditors. When a bankruptcy case is dismissed, creditors can swoop in during a lapse in the automatic stay. If that dismissal is permanent, the debtor will have wasted time and funds without achieving debt relief. The best way to avoid these types of obstacles is by having your petition filed by a professional. Our team makes that easier and more affordable with payment plan options starting as low as Zero Dollars Down. Learn more today with your free phone consultation by calling 702-842-0700