Authored by Cristina Ayo and Jonathan Ellis
Associations are all too familiar with bankruptcy serial filers disrupting foreclosure sales leading to frustrating and costly consequences for the Association. Each new bankruptcy filing by the debtor forces the Association to incur additional costs and increases the amount of debt owed while the debtor continues to live on the property without paying the Association.
Associations frequently experience the typical scenario individual serial filers or joint property owners that stagger their bankruptcy filings as a “tag-team” for each individual owner to benefit from the automatic stay of the other. Typically, on the eve of the foreclosure sale, the owner(s) or one member of the “tag-team” will file their Bankruptcy petition to disrupt the foreclosure action. Their case will eventually get dismissed, while the owner or the other member of the “tag-team” files, again stopping the rescheduled foreclosure. The same pattern of filling, delay, dismissal, and reschedule foreclosure proceedings can last years leaving Associations powerless.
