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Homeowners associations turn to Chapter 11 bankruptcy

The economy has been rough for many people in Florida for the past several years. In particular, the housing market has been hard hit. While there has been some recovery, many people struggle on a day-to-day basis to make ends meet.

Florida businesses are not exempt from these economic troubles. Many have had to consider their debt relief options in order to stay afloat in this new economy. Homeowners associations may be particularly hard hit at this time. As homes have fallen into foreclosure, and homeowners have had a hard time paying their dues, homeowners associations have not collected the money they have needed. This has created a problem for many of them. Now they are left dealing with large debts without a consistent revenue source.

Some Florida homeowners associations have turned to Chapter 11 bankruptcy in order to deal with these issues. In these cases, the bankruptcy has given the associations protections from creditors while they reorganized their finances.

In one case, a delinquency rate of 25 percent made it difficult for the association to pay utility bills. The automatic stay of a Chapter 11 bankruptcy helped to keep services running as the association restructured its debt. Eventually, the association completed the bankruptcy process and was able to continue running.

When businesses face difficult financial circumstances, a Chapter 11 bankruptcy or other business bankruptcy may be the right answer. With the right help, these procedures can eliminate debt and allow a business to get a fresh financial start.

Source: Miami Herald, "Filing for Chapter 11 bankruptcy reorganization: viable option for condo associations, HOA's," Jeffery S. Berlowitz, March 22, 2015

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