On Thursday, the United States Senate passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (S. 256). This bill has received much press due to the credit card company lobby seeking to limit the dischargeability of consumer debts. What has received less press is the important language in the bill pertaining to condominium and homeowner association assessments. Language in the bill, specifically Section 412 of the Act would amend Section 523(a)(16) of the Bankruptcy Code, would provide that a debtor would not receive a discharge of certain community association assessments. Specifically, the bill provides a discharge does not limit a debtor's liability:
(16) 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 or in a share of a cooperative corporation, or a lot in a homeowners association, for as long as the debtor or the trustee has a legal, equitable, or possessory ownership interest in such unit, such corporation, or such lot, but nothing in this paragraph shall except from discharge the debt of a debtor for a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case;
The House will next take up the measure, which President Bush stated he will sign. We will stay tuned to see if the quoted language above makes it through.
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