A recent federal decision in Massachusetts, Waters v. Kream, et al. (Lawyers Weekly No. 02-059-11) (6 pages) (O’Toole, J.) (USDC) (Civil Action No. 08-11912-GAO) (March 16, 2011), ruled that a debt collection letter did not violate federal (Fair Debt Collection Practices Act, FDCPA) or state (Chapter 93A) consumer protection statutes. The letter was written after the filing of a lawsuit and service of summons and complaint upon the defendant for an account with an outstanding balance of $21,472. The letter stated in part, “you have been served with process in a court case. If you get in touch with us, we may be able to come to a settlement. If that happens, you will be spared the costs of defending the case in court.” The defendant was advised to contact the law firm and set up a regular payment schedule if he could not pay the balance in full and warned that failure to respond to the letter would result in the firm proceeding with the lawsuit. Judge George A. O’Toole Jr. found that “[the correspondence] did not purport to advise the plaintiff as to his obligations, such as telling him he had to do something specific.” Strict liability under the FDCPA does not require clarity in all writings and is not a command to write “at a sixth grade level,” according to the ruling. The judge used a least-sophisticated consumer test to reach his decision, saying “this standard, while protecting naïve consumers, also prevents liability for bizarre or idiosyncratic interpretations of collection notices by preserving a quotient of reasonableness . . . The reference to the ‘Summons to appear in Court’ was, in the context of the entire letter, simply a way of introducing the nub of the letter, which was the suggestion that the plaintiff get in touch with the lawyers.”
April 30th, 2011 by Administrator
A recent article, illustrates the importance of people keeping good records of their accounts. The statute of limitations to pursue a claim for a debt owed runs from the time that debt is “charged off” by the creditor, meaning the account is no longer considered to have active status. Creditors who do not pursue claims after the running of the statute of limitations might hope that their unaware former account holders will pay off outstanding debts if they are financially better off. These creditors cannot in fact collect on these debts.
February 16th, 2011 by Administrator
Last week’s Massachusetts Lawyers Weekly has as a front-page story an article about a recent decision out of the Eastern District of New York, Weiss v. Zwicker & Associates. The judge found the defendant debt collection firm violated the Fair Debt Collection Practices Act by sending a letter to a debtor on behalf of American Express that did not clearly state the amount of money owed. The letter at issue was sent on March 26, 2008 unsigned indicating an amount owed. The letter further stated that the creditor had hired its firm for the Plaintiff’s “failure to respond to previous collection attempts.” According to the letter, the balance “may include additional charges including delinquency charges, as applied at direction of [AMEX], if said charges are permissible in accordance with the terms of your agreement.” U.S. District Court Judge Arthur D. Spatt found that a consumer could possibly interpret that the total balance included additional charges which were not adequately disclosed.
This case made me think of some of the more outrageous debt collections letters I have seen in bankruptcy practice. One that comes to mind is a letter to the debtor’s employer to terminate a wage garnishment on the employee’s earnings that included the debtor’s Social Security number. This SSN would be in full view of both parties receiving the letter, the employer and me as debtor’s attorney and seems unnecessary as employer would presumably otherwise adequately identify the debtor as its employee with a wage garnishment in place on their paycheck.
Lawyers defending firms against the Fair Debt Collections Practices Act seem to feel that the federal statute is interpreted very differently from one jurisdiction to another. Regardless of this, a debtor receiving a debt collection letter with language that seems questionable should not hesitate to contact an attorney in their jurisdiction specializing in this type of litigation to determine whether they may have a cause of action and if not but they need to deal with such debts through bankruptcy to contact a qualified bankruptcy practitioner in their jurisdiction to determine whether they might qualify for discharge relief from such debts.
November 24th, 2009 by Administrator
