The Fair Debt Collection Practices Act (FDCPA) provides two ways to stop a
debt collector from calling a consumer:
1. If the consumer notifies the debt collector in writing that the consumer refuses to pay the debt or that the consumer wishes the collector to stop calling, the collector must cease calling after one final communication. 15 USC § 1692c(c).
2. If a debt collector knows that the consumer is represented by an attorney and knows or can readily ascertain the attorney’s name and address, the debt collector may not communicate with the consumer unless the attorney fails to respond to communications within a reasonable time. § 1692c(a)(2).
The FDCPA cannot be used to stop direct collections from creditors because it is applicable only to third-party debt collectors.
The FDCPA does not apply to creditors collecting debts on their own behalf, except if they use a name other than their own to do so. “Debt collector” is defined in §1692a(6) as a person who is “collecting on behalf of another” and who “regularly” collects or attempts to collect debts. Lawyers often come under this definition of debt collector. The Supreme Court in Heintz v. Jenkins, 514 U.S. 291 (1995), held that an attorney who regularly uses litigation to collect consumer debts on behalf of a client is a debt collector, subject to the FDCPA. Therefore, lawyers who bring suits on behalf of clients against consumers, seeking payment of debts, need to adopt practices that comply with the FDCPA and this includes “appearance” attorneys.
Section 1692g requires that a debt collector send a written “validation” notice along with the debt collector’s initial communication to the consumer. The notice must contain the following:
– the amount of the debt;
– the name of the creditor;
– a statement that unless the consumer disputes the validity
of the debt within 30 days of receipt of the notice it will be
assumed to be valid, and
– information that verification of the debt will be obtained if
the consumer disputes it.
Debt collectors must convey the validation notice in a legible manner that will be noticed.
Any debt collector that fails to comply with any FDCPA provisions is liable to the consumer for any actual damages and for up to $1000 in statutory damages. 15 U.S.C. § 1692k(a)(1)-(2). The consumer may recover the costs of the action and a reasonable attorney’s fee as determined by the court. Actual damages include compensation for emotional distress. State law requirements for recovery of negligent or intentional infliction of emotional distress are inapplicable. See Maxwell v. Fairbanks Capital Corp., 281 B.R. 101 at 118 (noting that the appropriate standard for judging unfairness of debt collection practices is from the perspective of “the least sophisticated debtor,” suggesting that damages for subjectively-experienced emotional distress could be recoverable even if that distress is greater than what an ordinary debtor might experience).
A debt collector is, “any person who uses an instrument of interstate
commerce or mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). Repossession and the sale of personal property is not a debt collection activity under the FDCPA. Likewise, with respect to non-judicial foreclosure of security interests in houses. See, Bergs v. Hoover, Bax & Slovacek, LLP, 2003 U.S. Dist. LEXIS 16827, at 1 (N.D. Tex. Sept. 24, 2003); Beadle v. Haughey, 2005 WL 300060, 4 (D.N.H. Feb. 9, 2005) It is not clear whether foreclosing on a mortgage constitutes debt collecting activity under the FDCPA. Id. at 4. However, the most recent case to discuss whether proceeding in rem is debt collecting and subject to the FDCPA seems to suggest it is.
Piper v. Portnoff Law Assocs., Ltd., 396 F.3d 227 (3d Cir. 2005). In Piper, the law firm subjected itself to the FDCPA by attempting to collect a personal liability and requesting payment to be made directly to the firm instead of to the city. Accordingly, the court stated that “the issue for decision is whether PLA’s communications to Piper were communications by a ‘debt collector’ with a ‘consumer’ in ‘connection with the collection
of a [debt].’” Id. at 232.
The Seventh Circuit determined that a loan servicer was not a debt collector under the FDCPA because it was seeking payment currently due under a superseding agreement. Bailey v. Security Nat’l Servicing Corp., 154 F.3d 384 (7th Cir. 1998).
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