What does an HOA board do when an owner files bankruptcy?

By OurHOA · General information · Revised November 4, 2026

What an HOA board does when an owner files bankruptcy: stop collection, split the ledger, file a proof of claim on time, and track post-petition dues.

Part of the HOA board handbook: treasurer and money.

The short answer

Stop collecting the old balance the day you learn of the filing, split the owner's ledger at the petition date, and get the proof of claim deadline on the calendar. Keep billing the dues that come due after the filing, because those are usually still owed. Then call the association's attorney before anyone takes a step against the owner or the home. That is most of the job. The rest of this guide covers the order to do it in, what to read in the court papers, and the Chapter 13 details that trip up volunteer boards. What an owner can expect from a filing is covered in our guide on whether bankruptcy wipes out HOA dues. This guide is general education for boards, not legal advice. Bankruptcy outcomes turn on the chapter, the district, the state's lien law and the association's own declaration, so get counsel involved early.

The first 48 hours

Notice usually arrives as a letter from the bankruptcy court, a call from the owner's lawyer, or a line on the owner's next check. Whoever receives it should forward it to the treasurer the same day. Then work through this list. Look up the case on PACER, the federal courts' records system. It costs $0.10 a page, capped at $3 per document, and fees are waived for any quarter in which you spend $30 or less, so a small association rarely pays anything. Write down the case number, the district, the chapter, the petition date, the debtor's attorney and the trustee. Turn off automated reminders, late fees and interest on that account. Tell your manager or collection attorney in writing to pause the file. Put a note on the account so nobody on the board sends a friendly nudge next month. The automatic stay in 11 U.S.C. section 362(a) bars any act to collect a pre-petition claim and any act to create, perfect or enforce a lien, and section 362(k) lets an individual hurt by a willful violation recover actual damages, costs and attorney's fees. A billing email that goes out on schedule counts.

Split the ledger at the petition date

Everything owed on the petition date goes into a frozen bucket. Everything that comes due afterward is billed as usual. Say the owner files on March 10 with four months of $260 dues unpaid, $150 in late charges and $150 in collection costs. The frozen pre-petition balance is $1,340, and no statement should ask for it. The April 1 assessment starts the post-petition side of the ledger and gets a normal statement. That split matters because 11 U.S.C. section 523(a)(16) excepts from discharge the association fees that come due after the order for relief, for as long as the debtor or the trustee holds a legal, equitable or possessory interest in the lot. The old balance is a claim in the case. The new dues are a live bill. If money arrives after the filing, ask the attorney how to apply it before posting it. Applying a post-filing check to the frozen balance can look like collecting it.

File a proof of claim on time

A proof of claim, Official Form 410 from the federal courts, is how the association asks to be paid from the case. Under Federal Rule of Bankruptcy Procedure 3002(c), a claim in a voluntary Chapter 7 case or a Chapter 12 or 13 case is timely if filed within 70 days after the order for relief. In Chapter 11 the court sets the deadline under Rule 3003(c). Read the court's notice first. In many Chapter 7 cases it says there appear to be no assets and tells creditors not to file unless the court later asks. Attach the ledger through the petition date, the assessment section of the declaration, and any recorded claim of lien. Whether the claim is secured depends on state law. In Florida, section 720.3085(1) gives the association a lien when the governing documents authorize one, relating back to the date the declaration was recorded. Against a first mortgage of record, though, the lien counts only from the date a claim of lien is recorded, so check whether one was recorded before the petition date. In Colorado, section 38-33.3-316(4) says recording the declaration perfects the lien and no further claim of lien is needed. Rule 3001(c)(2)(C) requires Form 410A for a security interest in a debtor's principal residence, and practitioners disagree on whether an HOA lien is one, so follow your attorney's practice for that court. Many boards have the attorney file the claim, which usually costs less than the claim is worth.

Chapter 13 means reading the plan

Chapter 13 is the chapter owners use to keep the house, and it asks more of the board. The debtor proposes a plan that runs three years, or up to five, under 11 U.S.C. section 1322(d), and must start plan payments within 30 days of filing the plan or the order for relief, whichever is earlier, under section 1326(a). Section 1322(b)(5) lets a plan cure a default over a reasonable time while ongoing payments continue. When the plan arrives, check four things. Is the association listed? Is the arrears figure right? Does the plan say the owner will pay current dues directly? Does it surrender the home instead? Section 1324(a) lets any party in interest object to confirmation, and section 1324(b) sets the confirmation hearing 20 to 45 days after the meeting of creditors unless the court moves it earlier. Rule 2003(a)(1) schedules that meeting 21 to 50 days after the order for relief in Chapter 13, and 21 to 40 days in Chapter 7. Creditors may attend and question the debtor under section 343. A board rarely needs to go. It does need to raise a wrong arrears number before confirmation, not after.

When the new dues stop coming

Post-petition dues going unpaid is the most common problem boards face mid-case. The owner still owes them, but the stay may still block acting against the home. The fix is a motion for relief from the stay. Section 362(d)(1) allows relief for cause, including lack of adequate protection, and 362(d)(2) allows it where the debtor has no equity in the property and it is not needed for an effective reorganization. Whether a motion is worth the fee depends on the amount and how long the case has left. When the owner has surrendered the home and moved out, dues keep accruing until a deed records, and a lender can take months to finish a foreclosure. Once relief is granted, state limits still apply. Texas Property Code section 209.009, for example, bars foreclosing an assessment lien when the debt is only fines, the attorney's fees tied to those fines, or records and vote recount costs added to the account under sections 209.005(i) and 209.0057(b-4).

After discharge or dismissal

A discharge under 11 U.S.C. section 524(a)(2) is an injunction against collecting a discharged debt as the owner's personal liability. Stop pursuing the pre-petition balance from the owner for good. A lien that survived the case may still be enforceable against the property, and that is a question for counsel. If the case is dismissed without a discharge, the old balance is generally collectible again, but confirm the dismissal order with the attorney before restarting the collection steps from our guide on the timeline for collecting past-due dues. Balances the association cannot recover eventually come off the books, and our guide on HOA bad debt write-offs covers how.

A motion and a pause notice to copy

Motion for the minutes: "I move that the board direct the treasurer to stop collection on account 14 as of the petition date of [date], separate the pre-petition balance of [$] on the ledger, and authorize [attorney] to file a proof of claim in case no. [ ] before [deadline], at a cost not to exceed [$]." Note to the manager or collection attorney: "The owner of account 14 filed Chapter [7/13] bankruptcy on [date], case no. [ ], [district]. Please stop all collection activity, notices and fees on the balance owed on that date, and confirm in writing that the file is on hold. Continue regular statements for assessments due after [date]." Keep both in the account file with the court notice.

Mistakes boards make

The billing system keeps running and sends a late notice. A board member mentions the debt to the owner at the pool. The collection attorney never hears about the filing. The board lets the claim deadline pass because the notice went to an old mailing address. The board stops billing everything, including the post-petition dues it could have collected. The board writes off the whole account on the petition date when the lien may survive. Each of these is fixed by the same habit: one person owns the file, with the case number and every deadline written on it.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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