Debt collectors can be liable for actual and statutory damages under the Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act for seeking to collect a time barred debt. As such, understanding the applicable statute of limitations and when it accrues with respect to collecting consumer debts is an important first step in any collection activity.
The issue of when a cause of action accrues for a deficiency following the sale of personal property was recently addressed by the Third District Court of Appeals in Arvelo v. Park Finance of Broward, Inc., in an opinion dated June 24, 2009. Here, the finance company argued that the statute of limitations did not accrue until the event which fixed the claim for deficiency, i.e., the sale. However, the Court disagreed and held that the applicable statute of limitations on a claim for deficiency commenced when the loan defaulted and, pursuant to the terms of the installment agreement, all sums due were automatically accelerated. Thus, to avoid potential liability under the fair debt acts, a debt collector must be sure to accrue the applicable statute of limitations on the date a loan is declared in default and accelerated, and not the date the deficiency is established.
This holding, however, does not impact the collection of a deficiency in a foreclosure action. An action for a deficiency in a real estate foreclosure action does not accrue until there is a final judgment of foreclosure and sale of the mortgaged property thus establishing the existence and amount of deficiency. The Arvelo court distinguished a foreclosure action recognizing that, as a matter of Florida law, a mortgagee may bring a separate action to recover a deficiency. However, a secured creditor, or a debt collector collecting a deficiency on behalf of a secured creditor disposing of personal property, must be sure to calculate the statute of limitations from the date of acceleration.
Source: Arvelo v. Park Finance of Broward, Inc., 3rd DCA, June 24, 2009