Behind on Association Fees in Hawaiʻi? What Bankruptcy Can Do
This guide is legal information, not legal advice, and reading it does not create an attorney-client relationship. Every situation is different, and the right move in your case depends on your facts. For advice about your own situation, start with my free questionnaire or call me at (808) 468-7000.
I work hard to keep this page accurate, but errors or omissions are possible and the law can change. The information here is current only as of the date above.
Can bankruptcy help if you are behind on association fees in Hawaiʻi?
Yes. Filing a bankruptcy case stops an association foreclosure the day it is filed, and the fees you already owed are erased along with your other debts. What happens to the fees that keep adding up after you file depends on which chapter you file. In either chapter the association keeps its lien on the unit, so a discharge ends what you owe personally without clearing the property itself.
An association does not have to wait for your mortgage lender. It has its own lien and its own way of enforcing it, which is why falling behind on fees can put a home at risk while the mortgage payment is current.
Key Takeaways
- Your association has a lien on the unit. In Hawaiʻi, unpaid assessments become a lien by operation of law, without the association suing you first.
- It does not need your mortgage lender to act. The statute lets an association foreclose on its own lien without filing a lawsuit, unless the lien is only for fines, penalties, legal fees or late fees.
- Filing stops an association foreclosure. The automatic stay takes effect the instant your case is filed.
- Fees you owed before you filed are erased. In a Chapter 7 that comes with the discharge a few months in. In a Chapter 13 it comes when you finish the plan.
- Fees that come due after you file are treated differently in each chapter. This is one of the few places where the choice between Chapter 7 and Chapter 13 turns on a single issue.
- The lien stays with the unit. A discharge ends what you owe personally. It does not remove the association’s lien and it does not take your name off the title.
What Your Association Can Do About Unpaid Fees
In Hawaiʻi, unpaid association fees become a lien on your unit automatically, without the association going to court first. That is true whether you pay a condominium association or a homeowners association, often shortened to HOA. The lien covers your share of the common expenses, which is the law’s name for the building’s operating costs and its reserves.
Hawaiʻi keeps condominiums and planned communities under two different chapters of its statutes, and on the association’s side they work the same way. Both give the association a lien for unpaid assessments, and both let the association enforce it. Some of the protections an owner gets sit only in the condominium statute, so tell me which one you are in.
The association can foreclose on that lien without filing a lawsuit. The statute permits a nonjudicial or power of sale foreclosure whether or not the association’s own documents contain power of sale language. One exception is written into it: where the lien is only for fines, penalties, legal fees or late fees, the association has to go to court.
There is one more step the association has to take first, and it applies to condominiums only. The notice of default has to offer you mediation, and the association cannot go ahead with a nonjudicial foreclosure until mediation has happened or the time to ask for it has run out. A planned community association is under a different statute and has no equivalent requirement.
Nothing in that depends on your mortgage lender. An association can move on its own lien while your mortgage payment is current, which is what makes unpaid fees their own problem rather than a smaller version of a mortgage default. My guide to stopping foreclosure covers the mortgage side, which follows a different route.
If the unit is rented out, the association can reach the rent as well, but only where it forecloses by filing a lawsuit. There, the plaintiff is entitled to have a receiver appointed to collect the rent owed by the owner or by any tenant.
How Filing Stops an Association Foreclosure
Filing a bankruptcy case stops an association foreclosure the same day, because of the automatic stay. The stay is a federal injunction, meaning a binding legal order, and it takes effect the instant your case is filed.
It reaches the association the same way it reaches every other creditor. A scheduled sale cannot go forward, a collection lawsuit stops where it stands, and the letters and calls about what you already owed have to stop. It does not matter whether the association chose the court route or the nonjudicial one. Bills for the fees that come due after you file are a different matter, and the next two sections are about exactly that. If you have had a bankruptcy case dismissed within the past year, the protection can be much shorter or may not arrive at all, so tell me at the start if you have filed before.
The stay pauses collection. The discharge is what erases debt, and the two happen at different points in a case. That distinction matters more here than it does on an ordinary debt, because of what happens to the fees that come due in between.
Which Fees Bankruptcy Erases, and Which It Does Not
The association fees you owed on the day you filed are erased in either chapter, though in a Chapter 13 that comes at the end of the plan rather than the start of it. The fees that come due afterward are not treated the same way.
The fees that were already behind are an ordinary debt. They go in with the credit cards and the medical bills and they are discharged.
The fees that come due after you file are the harder half. In a Chapter 7, federal law says those stay your responsibility for as long as you own any interest in the unit. In a Chapter 13 that you complete, they can be erased along with the rest.
| Chapter 7 | Chapter 13 you complete | |
|---|---|---|
| Fees you owed before you filed | Erased | Erased |
| Fees that come due after you file | Stay yours while your name is on the unit | Can be erased |
| The association’s lien on the unit | Stays | Stays |
Why the Chapter You File Can Change the Answer
If you are giving up a condominium you cannot afford, the chapter you file changes what happens to the fees that keep building up after you file.
In a Chapter 7, those later fees stay your responsibility for as long as your name is on the unit, even after you have moved out and even after your discharge. In a Chapter 13 that you finish, they can be erased along with everything else the plan covers.
The Chapter 13 result depends on completing the plan. A plan can run as long as five years. If it is not finished and the court grants a discharge on hardship grounds instead, the later fees are not erased and they stay yours.
If you want to keep the unit, the chapter matters for a different reason. A Chapter 7 erases what you owe personally on the fees that were already behind, and it leaves the association’s lien on the unit, so that lien is still there when the case is over. A Chapter 13 pays those past due fees through the plan while you stay current on the new ones, and the association is bound by the plan once the court confirms it.
This is one of the few places on this site where the choice between the two chapters turns on a single issue. My comparison of Chapter 7 and Chapter 13 covers the rest of that decision, which usually rests on income, property and the reason you are filing.
Let’s talk about your options.
I have helped more than a thousand people through bankruptcy in Hawaiʻi. Tell me what you are dealing with and I will tell you what you may qualify for: Chapter 7, Chapter 13, or another path entirely.
Catching Up on Association Fees in a Chapter 13
A Chapter 13 plan can cure an association fee default over the life of the plan, the same way it cures a mortgage default.
The plan runs three to five years. What you were behind on goes into it and is paid over that period, while you keep up with the current fees going forward. Confirmation of the plan is what gives you that time, and the association is bound by it.
This is the same mechanism that lets a homeowner keep a house after falling behind on the mortgage. My Chapter 13 guide explains how a repayment plan is built and what has to be paid through it.
The Lien Stays With the Unit, and So Can Your Name
A discharge ends what you owe the association personally. It does not remove the association’s lien on the unit.
Those are two separate obligations, and bankruptcy reaches only one of them. Once the case is over, the association can still look to the property for what its lien secures, which is why a discharge is not by itself the end of the story for someone who wants to keep the unit.
Giving up a unit is not the same as getting your name off it. If you surrender a condominium and the mortgage lender never completes a foreclosure, title stays in your name, and in a Chapter 7 the fees keep running against you for as long as it does. A discharge does not transfer the property and it does not stop the association from foreclosing on its own lien.
If there is an association involved in your situation, say so at the start, because it can change which chapter makes sense and it changes what has to happen to the property.
What to Do if You Are Behind on Association Fees
If you are behind on association fees right now, a few steps make the picture clearer before anything is decided.
- Find out whether a foreclosure has actually started. Collection letters and a foreclosure are different stages, and only one of them puts a date on the calendar.
- Separate the fees from the charges added to them. Fines, penalties, legal fees and late fees are treated differently from the assessments themselves when it comes to how the association can enforce.
- Decide whether you want to keep the unit. That answer drives almost everything else, including which chapter fits.
- Keep the association’s notices, and read the dates on them. Hawaiʻi law gives you a window after a notice of default to pay the arrears and stop a nonjudicial foreclosure, and a shorter window to submit a payment plan instead. If the association accepts the plan, the foreclosure is on hold while you keep to it. Both windows are short, they run from the notice, and neither one requires a lawyer or a bankruptcy. That is why the paper matters.
I work with people on every island, by phone or video, so where you live does not change what I can do about an association problem, whether you are on Oʻahu, Maui, Kauaʻi, Molokaʻi, Lānaʻi or Hawaiʻi Island.
You do not need to work out which of these applies to you before you call. Sorting that out is my job.
Frequently Asked Questions
Can an association foreclose on my condo in Hawaiʻi for unpaid fees?
Yes. Unpaid assessments become a lien on the unit automatically, and Hawaiʻi law lets the association foreclose on that lien without filing a lawsuit, whether or not its own documents contain power of sale language. One exception written into the statute is a lien that is only for fines, penalties, legal fees or late fees, which the association has to take to court. The association does not need your mortgage lender to act first.
Does filing bankruptcy stop an association foreclosure?
Yes. The automatic stay takes effect the instant your case is filed and it stops an association foreclosure the same way it stops a mortgage foreclosure, a lawsuit or a garnishment. A scheduled sale cannot go forward while the stay is in place.
Are condo association fees erased in bankruptcy in Hawaiʻi?
The fees you owed on the day you filed are erased in either chapter, though in a Chapter 13 the erasure comes at the end of the plan rather than the beginning. They are an ordinary debt and they are discharged along with credit cards and medical bills. The fees that come due after you file are a separate question, and the answer to that one depends on which chapter you file.
What happens to association fees that come due after I file?
In a Chapter 7 they stay your responsibility for as long as you own an interest in the unit, so they keep accruing even after your discharge. In a Chapter 13 that you complete, they can be erased.
Can a Chapter 13 plan catch me up on association fees?
Yes. A Chapter 13 plan can cure an association fee default over the life of the plan, which runs three to five years, while you keep current on the fees going forward. It is the same mechanism that lets a homeowner keep a house after falling behind on a mortgage.
Does the association’s lien go away when I get my discharge?
No. A discharge ends what you owe the association personally, and it leaves the association’s lien on the unit in place. Those are two separate obligations and bankruptcy reaches only one of them.
Can I keep my condo if I am behind on association fees?
That depends on the lien. A Chapter 7 erases what you owe personally on the fees that were already behind, and it leaves the association’s lien on the unit, so the lien is still there when the case is over. A Chapter 13 pays those past due fees through the plan over three to five years while you stay current on the new ones, and the association is bound by the plan once the court confirms it.
I am giving up the condo. Do I still owe the fees?
It depends on the chapter and on whose name is on the title. In a Chapter 7, the fees that come due after you file stay yours for as long as your name is on the unit, and moving out does not change that. If the mortgage lender never completes a foreclosure, title can sit in your name for a long time while the fees keep running. In a Chapter 13 that you complete, those later fees can be erased.
Can the association take the rent if I am renting out the unit?
It can ask for the rent through a receiver. Where the association forecloses by filing a lawsuit, the plaintiff is entitled to have a receiver appointed to collect the rent owed by the owner or by any tenant. Filing a bankruptcy case stops that the same way it stops the foreclosure itself.
Key Terms, Explained
- Association fees
- The regular payments an owner makes to a condominium or planned community association, often called maintenance fees in Hawaiʻi, which cover the property’s operating costs and its reserves.
- Assessment
- The law’s word for an association fee. Unpaid assessments are what the association’s lien secures.
- HOA
- Homeowners association, the common shorthand for the body that collects association fees and enforces the rules where you live. On this page “association fees” and “HOA fees” mean the same payments.
- AOAO
- Association of Apartment Owners, the older statutory name for a condominium association. Buildings set up under the earlier statute still carry it in their legal name and on their notices. The current statute calls the same body the unit owners’ association.
- Association lien
- The claim an association has against a unit for unpaid assessments. It arises by operation of law, without a lawsuit, and it stays with the unit after a discharge.
- Nonjudicial foreclosure
- A foreclosure carried out without filing a lawsuit. The statute permits it for an association’s assessment lien, except where the lien is only for fines, penalties, legal fees or late fees.
- Automatic stay
- A federal injunction, meaning a binding legal order, that takes effect the instant a bankruptcy case is filed and halts collection, including an association foreclosure.
Sources & Legal Authorities
The authorities behind this guide.
- United States Code. 11 U.S.C. § 362(a)(1); § 362(a)(4); § 362(a)(5); § 362(a)(6); § 362(c)(3)(A); § 362(c)(4)(A)(i); § 523(a)(16); § 1322(b)(5); § 1328(a); § 1328(a)(2); § 1328(b); § 1328(c)(2)
- Hawaiʻi Revised Statutes. HRS § 421J-10.5; § 514B-3; § 514B-146; § 514B-146.5(a); § 514B-146.5(c); § 667-19; § 667-92; § 667-92(c)
- Cases. Goudelock v. Sixty-01 Ass’n of Apartment Owners, 895 F.3d 633 (9th Cir. 2018), cert. denied sub nom., 139 S. Ct. 604 (2018)
