The bankruptcy imposes an automatic stay that stops creditors from harassing you, taking steps to collect the debt, or doing a foreclosure sale pending the outcome of the BK, or until the HOA files a motion to lift the stay so that it can proceed with a foreclosure sale. However, your question is whether the HOA can sell the note, not whether it can foreclose. Normally an HOA would only have a debt owed to them per the CC&Rs, not a promissory note. Yes, it can sell the debt, but the BK rules affect the new owner of the note (apparently the collection company) the same as the HOA, therefore the fact that they sold the debt . If the HOA filed a claim in the BK, then normally it would file a notice with the court that the claim has been assigned to a new party (the collection company). If the collection company is taking actions it should not have the right to take, they should be told to cease and desist due to the BK, assuming the BK is in a stage where the stay is still in effect.
Answered on Sep 17th, 2012 at 1:57 PM