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Past Due Condo Payments – How Bankruptcy Can Help

Robert J. Adams and Associates July 7, 2014

Condominium associations are much like landlords. They can evict you if you are behind on payments and also sue you to recover unpaid assessments. Bankruptcy can help you stay in the condo by repaying the dues or get rid of the debt if you decide to leave.


Condominiums (Condos) include multi-unit apartments and townhouses and some single family houses. While co-ops are a bit different this article generally applies to those too.

Owners of Condo units are responsible for monthly dues or assessments. In addition the Condo Association can levy special assessments. The special assessments can be required to be paid in a lump sum or over a period of time.


Generally condo payments are due monthly on the first of the month. If received after the 15th of the month a late charge is levied.

When the condo is behind 31 days or more the Association will send a collection letter for the full amount due giving a deadline for the account to become current or they will take action. Many Associations hire Management Companies. When a Management Company sends the letter they will likely add another fee.

The collection letter must comply with the Fair Debt Collection Practices Act allowing the condo owner time to dispute the delinquency and/or the amount demanded

If the account remains past due, the Association will refer the matter to a law firm who concentrates in collecting defaulted condo dues. Generally, they too will send a demand letter and tack on so-called reasonable attorney’s fees.


As the matter progresses there will be a title search and thereafter a Lien will be recorded on the unit. Again more costs and fees.

The Condo Association can proceed with a Forcible Entry and Detainer suit. Like a landlord, they seek to gain legal possession of the unit. If a judgment is entered you can now be legally evicted by the sheriff, sometimes without giving you chance to pack your things.

While rare, the Association can actually file a Foreclosure. It is rare because most condos have mortgages and other liens making it impractical. But if there is a lot of equity in the unit, there is nothing to stop them.

When the condo unit is subject to foreclosure or if the condo owner abandons the unit, a Money Judgment can be entered against the owner. After that they can collect the debt just like any other creditor and seek wage garnishments and bank garnishments.



A condo owner can file a Chapter 13 bankruptcy. If you don’t wait too long, the eviction is halted giving you time to reorganize your debts. Assuming you have the ability to pay the current condo dues, a payment plan can usually be worked out to pay the back amounts over a period up to 5 years along with all of your other debts.


At any time the condo unit owner can file a Chapter 7 bankruptcy to obtain a discharge of back condo dues (although a lien will remain). However, the unit owner is legally responsible for future condo dues until someone else becomes the owner of the unit.

Frequently there is a pending foreclosure which will end with a sheriff’s sale. The unit owner can file a Chapter 7 and receive a discharge of the mortgage debt and condo arrearages but will have to pay future dues. Because foreclosures take close to a year these days, this might be cheap rent if the mortgage and past dues have been discharged.

On the other hand if the unit owner has moved out of the unit it might well be best to wait to file a Chapter 7 until after the mortgage company completes its sheriff’s sale.

If you are have a condo dues arrearage problem please feel free to contact us. We can discuss your problem and let you know what options you have. Our consultation is Complimentary and confidential, and we can act quickly to help you stay in the condo unit.