Playing the HOA – A Continuing Study in Audacity (Part I)

How to abuse the bankruptcy court and your HOA at the same time.

By Michael Jenner, MBA, as told to Mitchell Drimmer, CAM


This case study revolves around a homeowner’s association (HOA) located in the State of California dealing with a property owned by six individuals that has been plagued by chronic delinquency since 2008. The association embarked on a journey to recover the long-standing debt through non-judicial foreclosure. However, the owners resorted to a series of bankruptcy filings to delay and evade the sale, leading the HOA to uncover a history of repeat fraudulent bankruptcy filings.

Challenges Faced:

  1. Chronic Delinquency: The homeowners association faced a property with fourteen years of unpaid dues, highlighting the severity of the delinquency issue.
  2. Continuous Bankruptcy Filings: After the association initiated a non-judicial foreclosure action and obtained a sale date, one of the owners filed for bankruptcy to halt the sale. This pattern continued with each owner of the property filing for bankruptcy to disrupt the collections process. 
  3. Dismissed Bankruptcy Cases: The owners’ attempts to utilize bankruptcy as a sword and shield to avoid foreclosure were undermined by their failure to adhere to bankruptcy requirements, leading to the dismissal of their cases. Nevertheless, the bankruptcy filings prevented the association from moving forward with their attempts to collect or utilize their security interest by way of foreclosure.
  4. Bringing in Relief: The association’s determination to recover the debt led them to engage the services of an approved Axela Technologies collection solution with experience in researching owners’ bankruptcy history and the abuse that can manifest itself in these bankruptcy pleadings. To avoid having to stall the non-judicial foreclosure action once again, and in anticipation of additional future bankruptcy filings on the horizon, Axela’s collection solution caused the filing of a motion for relief from the automatic stay.  The basis for this motion was that all the repeated bankruptcy filings were sought in bad faith and part of a larger scheme. This legal action was necessary to pursue an “in rem” order aimed at circumventing the owners’ misuse of bankruptcy to halt the foreclosure process. Motion for relief from the automatic stay procedurally comes before obtaining the in-rem order. Motioning the court for relief from the automatic stay is the basis for obtaining rem relief.
  5. In-Rem Order: Upon the judge’s review of the motion for relief from the automatic stay and the declaration speaking to the elaborate scheme (which was filed with the motion), the judge had irrefutable evidence that in rem relief was warranted. This effort unveiled a startling total of twenty-seven bankruptcy filings among the owners, many of which were dismissed. Armed with this evidence, the judge not only entered the in-rem order for the owner who filed the most recent bankruptcy, but the judge also terminated the automatic stay in relation to any other “co-debtors” who may file a subsequent bankruptcy.


  1. Granting of Relief from Stay: The association’s motion for relief from the automatic stay was granted, providing the HOA with the legal ability to proceed with the foreclosure process despite the owners’ bankruptcy filings.
  2. Owners’ Surrender: Faced with the weight of the in-rem order and the impending foreclosure, the owners finally chose to negotiate. They approached Axela’s collection division with a settlement offer to clear the $69,000 debt accumulated over the years.
  3. Payment in Full: As a sign of good faith, the owners paid $33,000 upfront, with the agreement to pay the remaining balance of $36,000 by a specified date.

The combination of the in-rem order, the granted relief from the automatic stay, and the association’s decision to bring in the collection professionals who work with Axela Technologies resulted in a successful breakthrough. The unveiling of the history of fraudulent and bad-faith bankruptcy filings exposed the owners’ attempts to manipulate the legal system for personal gain. The settlement arrangement marked a significant step toward resolving the longstanding delinquency issue and recouping the owed funds.

Lessons Learned:

  1. Persistence Pays Off: The homeowners association’s determination to pursue the debt recovery process, despite the obstacles posed by repeated bankruptcy filings, was key to its success.
  2. Thorough Research: Delving into the owners’ bankruptcy history allowed the association to uncover a pattern of misuse and bad faith filings, strengthening their legal position.
  3. Legal Strategy: What is most astounding about this recovery is that the association’s prior attorney did not uncover the malfeasance created by the fraudulent bankruptcies. One could say that the attorneys were not seeking a genuine resolution but instead working in a narrow-minded manner. They certainly did not do their research or think outside of the box to find a solution. Perhaps results are not obtained when billable hours are income-generating events and not resolved cases. Once referred to the Axela Technologies team, this matter was discovered to be a scam being perpetuated by the owners of this delinquent income property. The strategic use of a motion for relief from the automatic stay and in-rem order showcased a comprehensive data-driven approach to overcoming bankruptcy-related hurdles. The legal strategy was not conceived by lawyers but rather by the Axela Team’s Collection Solution, whose interests were aligned with the community association.
  4. Negotiation Skills: The association’s willingness to allow Axela’s collection solution to engage in negotiations and accept partial payments demonstrated a balanced approach to debt resolution.

This case study illustrates the challenges one HOA faced in recovering a long-standing delinquency issue, how they navigated the complexities of repeated bankruptcy filings, and ultimately uncovered a scam and achieved success through a combination of legal action, persistence, and negotiation. The association would not have achieved success without Axela Technologies’ Collection Solution on its side.


100% of the past due assessments were recovered for the benefit of the association, and the cost of this work was paid for by the delinquent unit owners who thought that this was a way to avoid paying their association dues to reduce the costs of being an investment property owner. The property owners were not expecting the kind of creative solution-oriented thinking that Axela Technologies brought to the table. This case study proves that Axela is “How the Future Collects.”

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