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Association Dues Get Protection Under Debt Collection Laws


When a debt collector tries to collect a debt, and does so in violation of existing debt collection laws, a consumer can sue for damages. But what is a debt? Is all debt protected by the law? A recent case explored whether debts that are owed to homeowners’ associations or condominium associations qualify for protection under the law.

What Debts are Protected

As a general rule, only debts that are considered consumer debt get protection. There are a few ways to think about this.

The first is by the straight definition of consumer debt, which means debt incurred for personal, family or household reasons.

The other way to think about consumer debt is any debt that is not incurred for business or commercial purposes. Commercial or business debt doesn’t just apply to large businesses. An individual handyman who buys tools on credit may incur commercial debt. A small business that signs a commercial lease for an office has incurred business debt. During the foreclosure crisis, when many people were buying property, fixing it up, and renting it, many landlords took on commercial debt.

Sometimes, the type of debt can change. For example, your home is likely not commercial debt, but rather is personal, consumer debt. If you ever decide to move out of your home but start renting it out, the fact that your home loan is consumer debt doesn’t change, because the status of debt is determined at the time it is taken out.

Conversely, if you bought property with the intention of renting it out, it is commercial debt, and not protected by debt collection laws, even if you later decide that you will move into the property and live there.

HOA Dues Get Protection

A recent case explored homeowners’ association debt. Although you may owe money to an association, you have not borrowed any money—in other words, there is no loan, and no credit extended, both factors that are usually present when incurring debt (although Florida courts have found there doesn’t actually have to be a loan contract, or an extension of credit, for debt to be protected under debt collection laws).

The Court in the case (which was actually brought under Florida’s version of the federal debt collection law) found that the owner incurred the obligation to pay HOA dues when the property was purchased. The fact that the actual dues are paid later (or periodically) is not determinative. The Court also found that debt collection laws are to be interpreted in favor of consumers, leading the Court to conclude that HOA debt is consumer debt.

The matter is not settled; many courts, including some in Florida, don’t find that HOA debt is actually debt protected by debt collection laws. Until the Florida Supreme Court finally resolves the matter, it will be up to each individual court to determine whether HOA dues are protected by abusive debt collection laws.

Fight back against abusive or deceptive debt collectors. Contact Jacobs Legal to speak with one of our Miami consumer rights attorneys today.


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