What are the associations chances of collecting assessments if the owner files a Chapter 13 bankruptcy?
Good. A Chapter 13 bankruptcy, also known as a “wage earners repayment plan”, should, in most cases (although there are no guarantees), eventually result in an association recouping all past-due assessments, as well as collecting current amounts as they come due. Under a Chapter 13 bankruptcy, the debtor sets up a payment plan administered through the bankruptcy trustee. The payment plan is designed to allow the debtor to pay off all secured, pre-petition debts (those debts incurred prior to the date of bankruptcy) over a three to five year period. Once the plan is approved by the court, the trustee will begin disbursing payments to secured creditors in the order of priority (tax liens and administrative claims are paid first). Subsequent to the court’s approval of the payment plan, the association should begin receiving periodic payments from the trustee. These payments from the trustee must be applied towards the pre-petition assessments and not to the post-petition assessments. The
