What is “Zombie Debt” and What Is Your Community Association Doing to Collect It

The classic definition of a Zombie Debt simply put “the undead.”  That is to say a person is dead but still has some features of being alive so in essence they are not “totally dead.”   It sounds creepy, and it is creepy but in almost every community association in these United States there lurks “Zombie Debt.”  Zombie Debt is best described as money an association has written off because a bank has foreclosed and there were dues owing that the association never received.  The mistake is that this debt is not dead and much like a Zombie it still lives and can be collected.  So why have not boards of directors and management companies not attempted to collect this Zombie Debt?

This is a good question that I have been trying to answer for five years since we have established the Write Off Recovery program in our company.  Some community associations have engaged this service and dollars from Zombie Debt are captured each and every week and deposited into their bank accounts.  Foreclosure does not extinguish debt, and I can assure you that many people who have walked away from their HOAs and Condos have the financial wherewithal to pay what is still owed.  So, why does not every single condo and HOA find a company who is willing to pursue Zombie debt?

It cannot be because there is a cost to such a service, as many collection companies will do this on a contingency basis.  I’m confident that one specialist in community association collections will even purchase said debt, thereby removing all costs and possible exposure to the community association that has been tainted by Zombie Debt.  Is it possible that community association boards of directors don’t even know that they can collect this Zombie Debt and will not even attempt to even inquire about it.  Or perhaps they feel that the likelihood of success is remote, but to that I say unless you try you will never know.  There is also the possibility that the work involved in setting up the process is expensive and cumbersome, and that is not true because all that is required is a signed agreement, a ledger, a copy of the certificate of title, and a copy of your governing documents, and perhaps a little faith.

So to boards of directors and management companies who are leaving money on the table, I suggest that it’s time to go Zombie hunting and find a collection solution that is not scared of Zombie Debt and will get out there and recover that money for you.

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