Please advice how to handle this issue. The collection agency is not willing to negotiate charges.

I am very sorry to hear about this. Homeowner disputes with their HOA have attracted the attention of the state legislature, when it passed and the Governor signed into law SB 137, which went into effect in 2006. The new law permits the HOA to foreclose only if one of the following conditions are met: (a) assessments (excluding late charges) exceed $1800, or (b) more than 12 months delinquent. The HOA can do other things, such as take you to small claims court or record a lien. Also, you need to review the agency charges, because they must not exceed the amount your association documents permit. No charges may be imposed that are not specifically provided in the HOA's governing documents. From the description that you provided, it seems that $38 has grown monstrously and you need to review each item to ensure it is permitted by the HOA rules. Finally, if the charges are not accurate, you need to send them a written dispute, by Certified Mail return receipt requested. Below is a link to sample dispute letters (see letter #1.1), but the HOA must comply with the Rosenthal Fair Debt Collection Practices Act (FDCPA) in collecting its charges. Thus, if it is trying to charge you more than the HOA is expressly permitted, you should promptly dispute that and the agency may not collect it. The collection agency is subject to both the Rosenthal FDCPA and the Federal FDCPA. If you dispute the charges, they are required to validate this, but you should be as specific as possible. If they continue to harass you and inaccurately report this on your credit, perhaps you may have a good case against them.

The above advice is sound and should be followed, but if the collection agency is recalcitrant, go to the office of your assembly person or state senator. Helping constituents is what local government officials are elected to do. In an election year choose the member either assembly or senate who seems most likely to keep their seat and file a complaint with them. They will open a file and if there is a way to help you that makes them look good they will help you with gusto. I have found over the years that many businesses especially ones wit no ties to the elected official will cave in rather than face a public and possibly reputation damaging dispute that gets media coverage. However, as the attorney stated above, you need all of your documentation, etc. That will make it easier for your advocate to help you.

Contact an attorney to see if the collection agency is asking for any improper fees. Search for consumer attorney or National Association of Consumer Attorneys in your area. Next ask for a hearing with the board to work out the problem.