A few years ago we took over an association that was struggling with unpaid assessments. They totaled nearly $200,000. In one instance the legal cost to recover the dues was equal to the amount collected. In one case a judgment was obtained, the attorney then offered for $1200 to find the same debtor and pursue recovery. This is the same debtor they had successfully obtained a judgment against. The board was unsure how to act. ??????????????????????????????
We were able to reduce that total indebtedness and collect from members who had lost their property in foreclosure.
It became apparent that we could quietly focus on individual members who were in financial difficulties and assist them with payment plans or seek judgments in small claims court that cost the association a fraction of the cost of a superior court judgment. Certain cases are too large for small claims and certain claims are indeed best handled by the association’s attorney especially when there are rent back provisions, bankruptcy issues, foreclosure looming from a superior lien etc etc.
But if an association consistently chases the smaller delinquencies while they are still small quite often payment plans make a good alternative to court action. One homeowner is paying off his not inconsiderable debt at the rate of $25 a month which is all he can afford; another is paying only $100 a month towards a debt of over $10,000.
We apply the stick and carrot method, always offering a carrot but wielding a big stick in the background. We love payment plans because the debtor has volunteered, in most cases, to make a certain commitment; when in court, we always offer to mediate the matter before trial, for the same reasons people who voluntarily come up with their own solutions usually commit to them. Besides the North County courts have some wonderful volunteer mediators.