"Good Standing" question

I am on the board of a Single family HOA in Ca. We have had a member that has been in collection for years. He recently declared Bankruptcy so we have lost the opportunity to collect about 4K in past dues. I noticed that he was trying to rent our Clubhouse and our rules clearly state that if you are not in good standing you can not rent that facility. I asked our Property Manager why was his name on our calendar and she said he is no longer Not in "Good Standing" because of the BK.

The question I have is he is technically not in good standing because we did not collect any of the dues he owes our HOA. I understand that the courts have decided to write off the charges but do we have to allow him to have his privilege's back? Has anyone ever tested this in the HOA world?

Thanks in advance,
Mark

A $4K discharge? Yuck! Alas, NpS is correct if this was a chapter 7 – if the $4k was discharged, you’re SOL on that money and if he’s paying fees now, he has all the rights of anyone else who has been paying.

However, if this is a chapter 13, you might get some money if the association files a proof of claim with the court, although you may still need to eat some of the money. Then again, if you missed the deadline to file the claim, you’ll SOL again.

Where was your attorney in all this? The court might have discharged the debt anyway, but he or she could have at least tried to protest the discharge. I’d have to have a serious sit-down with this attorney and possibly begin looking for another one!

I might also take a long look at the collection policy – if this guy was in collections “for years,” it would see the board should pulled the trigger long ago by filing a lien and then foreclosing. No it doesn’t guarantee payment (most of the time, you’ll still lose money), but the sooner you get rid of a non-paying homeowner, the sooner someone might come in and be more responsible.

The HOA should not have had to file anything. If the debtor did not list the HOA debt on the appropriate schedule, it wasn't discharged. If the HOA did not receive proper notice of the BK filings, the discharge can be reversed through the BK court. If the debtor got a chapter 13, there must have been a repayment plan which included repaying the debt to the HOA. If he has not kept up with those payments, he is in default, and therefore in bad standing.

Just to clear things up a bit.

We definitely filed a lien and had a collection company and our lawyer involved to chase this bad debt. The HO is now paying his dues so I guess we have no recourse. We have had BKs in the past and sometimes they go right back to not paying dues after the slate is cleaned. In this case he ha made his payments so far.

I was just hoping we had some way to stop them or that someone had any luck with this type of issue.

He's technically not in "good standing" but if the bankruptcy allowed for normal payment of dues going forward, I rent to him/her and collect the fee....it's a little bit of cash, at least!

We actually do have a good collection process. We send them to a collector and file a lien after 90 days but it still happens and takes a long time to get it resolved.