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FDCPA & Debts That Can Cause Despair

FDCPA & Debts That Can Cause Despair

The Federal Fair Debt Collection Practices Act (“FDCPA”) 15 U.S.C.A. § 1692, et seq. applies to attorneys engaged in the collection of debt for community associations.  The language contained in demand letters is a frequent source of FDCPA litigation. Liability is often imposed based on certain words contained in or omitted from the letter.

Damages recoverable under the FDCPA include actual damages, statutory damages, court costs, reasonable attorney’s fees and can result in class action liability.

Unlike credit card and other consumer retail debt which is generally charged off and then sent for collection, liability for homeowner association fees continues to accrue for so long as the owner has legal title to the property at issue. Hence, the collection process is ongoing.

Courts have held that a debt collector violates the FDCPA by stating the “current balance” of a consumer’s debt if the collector fails to disclose the balance is subject to increase due to the accrual of interest or other fees. This issue has been addressed by several very recent Court of Appeals cases.

To avoid potential FDCPA pitfalls, attorneys engaged in community association collections are cautioned to ensure that the language contained in demand letters comports with existing, controlling caselaw.

Do your demand letters comply with the requirements of the FDCPA?