Offer to "Settle" Time Barred Debt Violates FDCPA

In the case of Buchanan v. Northland Group, Inc., No. 13-2523 (6th Cir., Jan. 13, 2015) the Sixth Circuit Court of Appeals has reversed a lower court ruling that an offer to "settle" a debt outside the statute of limitations is not a threat to sue in violation of the FDCPA.  The Sixth Circuit held that such language in the absence of informing the debtor that she can't be sued on the debt violated the statutory ban on threatening to take legal action that cannot be taken.

The Court also examined the failure to inform a debtor that making a single payment could restart the statute of limitations and actually place the debtor in a worse position than if she had made no payment at all.  This practice coupled with the failure to inform the debtor that the debt could not be collected in court were potentially misleading in violation of the FDCPA.

There is a split among the circuits on this issue.  The Third and Eighth Circuits have held that dunning letters like the one at issue in Buchanan do not violate the FDCPA.  This issue may well make its way to the Supreme Court at some point, but for now, in the Sixth Circuit debt collectors that seek to settle time barred debt without informing the debtor that the debt cannot be collected in court because it is beyond the statute of limitations and that a partial payment may restart the statute of limitations violate the FDCPA.

The next question is whether the same logic applies to attempts to settle debts via telephone and the impact on the follow up validation letter if the initial attempt is via telephone.  Stay tuned.

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Tennesseans Beware

I just took on a client from Tennessee who was sued on a time barred debt.  Debt collectors are suing on debt outside the six year statute of limitations in Tennessee in what seems like epidemic proportions.

 

Why?  In Tennessee the General Sessions Court has jurisdiction over civil cases with a value of less than $25,000.  Debt collectors merely issue summons with a less than skeleton allegation that the victim owes the debt, the amount of the debt, and requested interest.  The victim then receives the summons with a date to appear in court.  The debt collector sits back and waits, hoping the victim won't show up on the court date, and if the victim doesn't show, the court enters a default judgment for everything the debt collector has asked for.

 

In addition, in Tennessee a debt collector can "prove" it owns the debt with an affidavit.  However, under a new change in the evidentiary rules, many of these affidavits are short of adequate.

 

If you are sued in Tennessee on a debt on which you last made a payment over 6 years ago, call a lawyer who practices consumer law.  Suing on a time barred debt is a violation of the Fair Debt Collection Practices Act.  You can get $1000 in damages, and the debt collector will have to pay your legal fees.

 

 

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Struggling with Student Loan Debt?

If you are struggling with student loan debt, you're not alone.  In 2014 the Government Accountability Office said that about $94 billion — more than 11% of the federal student loan volume in repayment — was in default.  The government has turned much of this defaulted debt over to debt collectors.  Because they are working for the government, many of these debt collectors feel like they are beyond the reach of the FDCPA (Fair Debt Collection Practices Act) and the TCPA (Telephone Consumer Protection Act).  They are not.

These debt collectors often engage in one or more of the following unlawful practices:

1. Calling at unreasonable times and calling over and over.
2. Allocating payments in a way to maximize late fees.
3. Inflating minimum payments.
4. Charging late fees during the grace period.

If you have been victimized by a debt collector regarding a student loan debt, contact a consumer law attorney and fight back.

www.debt-relief-law.com

866-279-9721