Homeowner in bankruptcy

The short answer is - probably. When someone files bankruptcy, all collections are suspended until the court sorts things out. If the homeowner declared chapter 7, chances all the fees that have accumulated up to that point are probably lost because the homeowner usually lists the association as a creditor. If he or she forgot to do that, you may be able to collect, as you weren't listed, but the person did declare bankruptcy so it's probably a waste of time.

If it's chapter 13, the owner may list the association as a creditor - if the debt doesn't get discharged, you may get some of your money back, but it'll be pennies on the dollar. You may want to speak to an attorney about all this, but don't be surprised if you have to write off the account and learn from this.

You say your management company failed to file a lien, but I think the real fault lies with your Board of Directors because they should be telling the management company what they want done. Surely someone knew this person wasn't paying - why wasn't he or she referred to the associaiton attorney? That could have been done long before the bankruptcy - you might have still arrived at this point, but at lease you would have taken a pre-emptive strike. Does your financial report (you should get one at least once a month) list which homeowners are delinquent and how much they owe? If not, why not?

Moral of the story - take a look at your collection policy (maybe with your attorney) and tweak it to ensure accounts are sent over and you have a general strategy of what will happen afterwards. Make sure your management company knows what's going on and pay attention to your financial reports - it should be listing who's delinquent and if your policy states the account is sent over after, say, 60 days or when it hits a certain amount, be sure you're following up with the management company to make sure it's happening.

This is now just a "stop the bleeding" measure now. It's best to hope for a new owner to move in. Can't get blood out of a turnip. If they are still in the home, then make sure to still file the lien. However, do not expect to collect any money. If this person can't meet their other debts they aren't going to meet the HOA's. So like Glen stated. Write this off as a bad debt.

However, also treat this like a lesson learned. My HOA we insituted a 6 months behind on dues, we filed a lien unless you made a payment arrangement. That policy helped us alot and we were able to get the process in place before the banks finished their foreclosure process. Still did not mean we got paid. It just meant we were in line to get paid. After a year, depending on the situation, we would discuss foreclosure. However, that is truly a stop the bleeding measure and only should be done in very specific circumstances. Otherwise a lien is the best option but time consuming.