Section 523(a)(16) of the BAPCPA provides for an exception to discharge for assessments that come due after the bankruptcy petition is filed. Associations can, therefore, pursue their members for assessments that accrue after the date of filing, but not those that accrue before the date of filing.
A new opinion issued this week by Judge Squires deals with an interesting situation where the debtors' unit flooded just two days before their bankruptcy filing. Then, several months after the bankruptcy filing, the association levied a special assessment against all unit owners to cover the cost of the flooding.
The association sent several letters and notices to the debtors without obtaining relief from the stay or otherwise seeking the guidance of the bankruptcy court. When those notices went unanswered, the association filed suit in state court. The debtors then moved for sanctions against the association in bankruptcy court for a willful violation of the discharge order.
The issue for the bankruptcy court was whether this special assessment was a pre-petition or post-petition debt. The court looked to the language of Section 523(a)(16), which excepts from discharge any assessments that "come due and payable" after the petition is filed. The court did not give much weight to debtors' argument that the special assessment was related to a pre-petition obligation that arose on the date of the flooding. Rather, the court looked to the date on which the special assessment came due and payable, which was after the petition date.
HERE is a link to the opinion.