Q&A: Owner Declares Bankruptcy

Q&A: Owner Declares Bankruptcy

Q. What can be done if a unit owner, who has not paid his or her maintenance for a year and owes the association $30,000, has now declared bankruptcy. How does the association get its money?

                                —Stuck With the Bill

A. “It is impossible to provide a reliable and completely useful answer to this question,” says attorney Elysa D. Bergenfeld of Ansell Grimm & Aaron, P.C., in Princeton. “The rights and strategies available to a condominium vis a vis unpaid assessments can be determined and discussed only on a case-by-case basis, once counsel is presented with all of the relevant facts.  

“A few comments though.  First, it could end up being a major challenge to do anything successful with a balance that was allowed to grow to $30,000.00.  Second, as long as the condominium is represented by counsel properly experienced in the representation of condominiums, it may have a great chance to recover funds despite any bankruptcy, and perhaps because of any bankruptcy.   Despite what a board often hears from counsel, a debtor’s bankruptcy does not end that condominium’s ability to recover unpaid amounts.  If the condominium, and its lawyer have acted diligently and properly up to the point that a bankruptcy was filed, that condominium should be situated in a way as to have significant rights vis a vis any bankruptcy.   Third, and in general, a condominium’s rights and strategies related to unpaid assessments and a debtor’s bankruptcy vary depending upon whether the debtor filed a Chapter 7 or a Chapter 13.  A Chapter 7 is a ‘give up’ bankruptcy, and a condominium should be able to foreclose upon a pre-petition lien, despite the Chapter 7.   A Chapter 13 is a ‘time out’ bankruptcy, and a condominium may be able to recover, in full, all amounts secured by a lien, recorded prior to that bankruptcy’s filing date.”

Related Articles

The white seal and red imprint with text PAST DUE on white surface. 3D illustration

Collecting Delinquent Common Charges

What Can Your Board Do?

Unpaid Assessments & Elections – Practical Strategies to Help Your Board Handle These Never-Ending Challenges

Unpaid Assessments & Elections – Practical Strategies to Help Your Board Handle These Never-Ending Challenges

2024 NJ Expo Seminar Sponsored by: Ansell Grimm & Aaron PC

Rubber stamp with the text past due over an invoice document. 3D illustration. Concept of unpaid debt recovery.

The Collections Process

Why It’s Critical to Community Health



  • What remedy is open for a Owner to claim amounts due to him but present Board of insiders are not accepting the claim shown per Property Managers hiding the facts?