While the economic recession seems to be over for the country as a whole, there are still plenty of smaller areas within the country that haven’t yet bounced back. One only need to look at the dire situation in Detroit to know that some areas may never rebound.
Because of the lingering economic downturn in some regions, condo owners are feeling the pinch and are sometimes not able to meet their financial obligations when it comes to their condo associations. This creates a ripple effect when the condo association is then unable to meet its financial obligations.
Fortunately, condo associations that find themselves in dire financial straits can file for Chapter 11 bankruptcy proceedings. Most people associate Chapter 11 with big businesses, but as it turns out, condo associations can file under it as well, giving them an opportunity for reorganization and a window of opportunity to negotiate with creditors.
While not an ideal situation, it is comforting to know that there is a contingency plan should an association fall into insolvency. And thankfully, Chapter 11 proceedings rarely affect condo owners themselves, or the day-to-day dealings of the property.
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