Comminuty filing for bankruptcy

[jluna1201]

Hello all,

I'm new to the site and hope i'm posting in the correct place!

I have a question and any and all advise would be greatly appreaciated...

I live in a Community consisting of 160 homes out of which only about half are paying their HOA dues. ($150 a month). Due to bad management from our previous Managing company we acquired alot of bad debt at the time when folks were actually paying. And so by the time our contract was up and we got new management we had almost $50k in bad debt!!!
The problem we are facing is- The builder made a contract with a Phone/internet company and a cable company for a term of 10yrs. We have tried high and low to get out of it, as it takes most of our money for very bad service, and they refuse to let us off the hook as our contracts with them are completely binding and with no loop holes as per our Attorney.
At the moment we have an outstanding bill with one of these companies for $43,000 and not enought funds to pay them. and with so many foreclosed/vacant homes and with so many homeowners in an economic crisis we dont believe we can get out of this one.
Now, our new management company has advised us to at least seek legal advise in regards to us filing for bankruptcy...before visiting with an attorney i'm just trying to gather some information. We have heard that these companies can put a lien on all the homes in the community!?! is that possible after filing for BK, If so, everyone here may just catch us on the news when a mob of angry homeowners burn down 3 homes in their own community!!!
JL

[HHM]

Interesting situation.

Is this a condo community or single family, detached homes.

If single family detached, you might have the option of simply dissolving the Association (this assumes there is not too much community property to maintain, for this you would probably need an HOA real estate attorney).

I am not sure how a chapter 7 would play out, as that is a liquidation.

Your only option is probably a chapter 11 and do a reorganization which could probably allow you to dump those service contracts.

In any event, you will need to see a higher end BK attorney.

[StartingOver08]

Hummm, this should be interesting.

I wonder if the HOA documents would have to be amended in some form after the association files bankruptcy? Are you thinking a Ch 11 or Ch 13?

I can see where this is going to be a more frequently addressed issue since there are so many non-paying owners.

[jluna1201]

Single family - detached...

Our only ammenity is a playground aside from that we have our common grounds, entrance, etc. nothing drastic.

I will speak with the other board members and advise them we should also speak to an HOA RE attorney aside from the BK atty before making our final decision. We have no idea what we are getting into or would file for...but Ch 11 sounds like the one way to a new start.
Either way, will keep posting until the end of our ordeal Hopefully it will help other communities facing our same problems- or close to them!