There is a worrying trend of new bankruptcy filings locally and nationally. The Eastern District of Michigan (covering the metro Detroit area) saw a 7% jump in new bankruptcy filings in 2024 compared to 2023. In March 2025, new bankruptcy cases nationally increased 13% versus March 2024.
This trend will impact community associations, particularly Chapter 13 cases which are intended to allow the debtor time to reorganize by paying off their debts in installments.
Community associations should know what their obligations are if a new case is filed and determine whether action is necessary to protect the association in that bankruptcy case. If you receive notice one of your owners filed a bankruptcy case, don’t disregard that notice.
We stand ready to advise you of action you must take upon the filing of a bankruptcy case. Attempting to collect unpaid assessments during a bankruptcy can result in sanctions against an association. Understanding what the association can and cannot do during the bankruptcy is paramount.
It’s a good time to review an article from our Attorney’s archives, Bankruptcy – What Every Condominium Association Must Know.
Reprinted with permission from MAGWV – Condominium & HOA Lawyers, Michigan