CHICAGO —  A recent federal court decision underscores the importance of minding the verbs used in communications from debt collectors. 

On Feb. 5, U.S. District Judge Harry Leinenweber ruled in Pierre v. Midland Credit Management Inc. that a letter sent to the plaintiff by the debt collector about a payment program for a debt she claimed she wasn’t obligated to repay violated the Fair Debt Collection Practices Act (FDCPA).

Douglas Sargent, Partner, Locke Lord LLP
Douglas Sargent, Partner, Locke Lord LLP |

Doug Sargent, an attorney at Locke Lord LLP, told the Cook County Record this ruling emphasizes “debtors have the right to be advised of the possible negative consequences that could arise from making a payment, or promising to make a payment, on stale debt.”

Pierre filed a class action suit against Midland after she allegedly received a letter from Midland, who took over her debt incurred from a defaulted credit card and did not inform her that making payments on her old debt could reset the statute, making her liable again for the full debt.

The judge did not apply the recent standard set by the U.S. Supreme Court in Spokeo Inc. v. Robbins that a plaintiff must establish a concrete injury to state a claim under the FDCPA. Although Pierre did not make payments after receiving the letter and thus did not prove a concrete injury, the court held that a debt collector’s correspondence to a consumer had the ability to influence them by not informing consumers about the ramifications of paying a time-barred debt.

In light of this decision, Ryan Holz, an attorney at Locke Lord LLP, told the Cook County Record debt collectors must be careful of the language they choose in their correspondence.

“Specifically, the court held it was misleading and a violation of the FDCPA for Midland Credit to write that it 'will not' sue on debt when the statute of limitations dictates that it 'cannot' sue on that debt,” Holz said. “Debt collectors should immediately review their communications and make sure that anything they cannot legally do, (such as) sue to collect a stale debt, is expressed using 'cannot' rather than 'will not.'”

Judge Leinenweber stated a typical consumer with a basic knowledge of credit would not have known after receiving a similar letter that making partial payments on debts they no longer had a legal obligation to pay could then reset the statute of limitations. 

The court also dismissed Midland’s argument that it was protected by the Consumer Finance Protection Bureau and the Fair Trade Commission. 

“Debt collectors need to take into consideration the relevant precedent in the jurisdictions in which they operate because at least some courts are not going to give deference to the positions of those agencies,” Holz said.

It’s likely that Midland will appeal to the U.S. Seventh Circuit Court of Appeals, but Sargent does not expect the decision to be overturned. 

“We would not be surprised if the Seventh Circuit affirmed this decision, while perhaps providing more clarity with respect to how far debt collectors must go in warning debtors about the legal consequences of their actions,” Sargent said.

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