Can't pay HOA fees before shortsale/foreclosure, is bankruptcy my only option?

[condoInGeorgia]

What is the name of your state (only U.S. law)? Georgia

Since September of 2010, I've been trying to sell my unit. Stopped paying mortgage and HOA dues at that time and now the dues are almost $6000. We have a buyer (although we've gone through 3 of them which backed out at the last second), but the HOA dues need to be settled before we can close. During this time, the fees have accumulated along with interest, etc. Now the banks are not willing to pay any of the HOA dues out of the shortsale, so I am left to deal with it. So it's either the shortsale, or a near foreclosure.

I do not have $6000 in my bank, not even near that much. I live month to month in Virginia now and I do not have extra cash on hand. I do not have any credit card debt either and it pains me that I may have to file bankruptcy before it's all over. I've been told that this HOA will probably garnish wages and accounts, so I get the feeling that my best option is bankruptcy before that happens.

Currently, the deed is only under my name, not my wife's name. Will bankruptcy effect her too?

Some more background:
I currently work part time for Georgia Tech (I work remotely and it's about 30 hours a week), so I do not make much money, but I depend on it to pay my rent, bills, etc. I moved to Virginia a year ago to allow the condo to have a better chance to sell and moved in with family. They ended up leaving, so my wife and I had to get our own apartment.

Any advice for someone in my situation?

 

[nanu156]

Wow that sucks.

All this work for a Short Sale and all for not.

Have you been in contact with the HOA? Here is the thing, the HOA and MTG companies lose big time if you go BK on them. Their best chance at recovering some money is to settle (short sale for the MTG, and settle for the HOA) they are not however required to settle on anything. The threat of foreclosure (it's costly to foreclose, and costlier still for the bank to own the home and have to sell it) So they are thinking, get a little or get less. The HOA needs to fall in line with this thinking, but there is nothing to force them to do so.

So FIRST I would get a letter from the HOA stating the balance due, and that they will not release lien until the are paid in full. Then I would supply a copy of that letter to the lender. I would furnish a letter with it stating that you will be forced to go BK if the lender can not pay the HOA. This should open up talks between the two. May not but hopefully it will.

Next, have the listing agent contact the buyer about the buyer paying the HOA to close on the home, if the home is a good enough deal they buyer may be willing to do so. When I bought my home I paid a huge water bill attached to the property in order to close. The buyer may or may not be willing.

If none of this works, go file your BK and forget about the rest. The short sale will be canceled, the house is the lien holders problem, any other debt with the exclusion of student loans and child support will go away. Your credit for the purpose of borrowing will appear just the same as if the short sale went through.

Lenders view short sales as foreclosures, and foreclosures and BK's are treated essentially the same for the purpose of underwriting credit for lending. I know from the perspective of a borrower it seems that a SS is better then a BK/FORECLOSURE but from the lender viewpoint, and actually once the foreclosure process starts it's treated as if it finished from a lending perspective.