How were pre-petition common assessments handled before the Act?
The unsecured debts are handled differently under Chapter 7 and Chapter 13. In a Chapter 7 case, the mortgages, taxes, pre-petition delinquent common assessments and other secured debts would be paid from the sale of the real property in order of the priorities established by state law. Any secured pre-petition debts not paid through the liquidation of the property would become unsecured debts. The unsecured debts are handled differently under Chapter 7 and Chapter 13. Under Chapter 7, if there are assets remaining in the bankruptcy estate, they are liquidated and used to pay the unsecured debts. If not all the unsecured debts can be paid, the remaining unsecured debts would be discharged unless the debt is exempt from the bankruptcy laws. Under a Chapter 13 filing, all or part of the unsecured debts would be paid over 3 to 5 years. The amount of the unsecured debt to be paid is determined by the bankruptcy court.
