New Bankruptcy Bill Passes U.S. House Judiciary Committee

On Friday, March 11, 2005, I reported that the U.S. Senate passed the New Bankruptcy bill. Yesterday on March 17, 2005, the U.S. House of Representatives Judiciary Committee passed the bill without any amendments by a vote of 22 to 13. The bill continues to contain the language that would clarify that community associations, including homeowner associations and commercial condominiums are entitled to post-petition assessments as long as the debtor owns the property. Specifically, it would expand the bankruptcy exemption contained in 11 U.S.C. 523(a)(16) to read as follows:

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, 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 posessory 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 bill next goes to the U.S. House Finance Committee. If it passes out of the Finance Committee, it is scheduled to go to the whole U.S. House of Representatives the week after April 5, 2005.