House Passes Bankruptcy Bill

Just moments ago, I watched the U.S. House of Representatives on CSPAN pass S.256, the bankruptcy bill without any amendments. This is the same bill that I reported on in an article on March 18, 2005.

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 President is expected to sign the bill and would become effective 180 days thereafter. However, there are some rumours that a "technical corrections" bill will be considered to fix certain problems before the effective date.