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Judge's rejection of lawsuit vs collector over $0 interest, fees line item closes 'fertile ground' for litigation

COOK COUNTY RECORD

Thursday, November 21, 2024

Judge's rejection of lawsuit vs collector over $0 interest, fees line item closes 'fertile ground' for litigation

Lawsuits
Law money 01

CHICAGO —  A Chicago federal judge has found a man can't sue a debt collector for including a line item in a debt collection notice claiming $0 in interests and fees.

And the decision could help shut off what would have otherwise been a path to more litigation against collectors, said two attorneys whose practices focus on consumer finance law.

U.S. District Judge Gary Feinerman granted summary judgment to debt collector Allied Interstate LLC in its dispute with plaintiff Clarence Wood in late December.


Ryan Holz | Locke Lord

 Doug Sargent, an attorney with the firm of Locke Lord in Chicao, said the court decision "is a significant win for debt collectors."

"Judge Feinerman found that a statement containing line items of $0.00 was neither deceptive nor misleading on its face," Sargent said, adding: "Iit was Mr. Wood’s burden to submit extrinsic evidence that the statement was misleading to unsophisticated consumers."

The attorney noted that a different decision would have brought a better path for plaintiffs.

"A decision in the other direction would have certainly led to more litigation," Sargent said. "Debt collectors frequently use $0.00 in statements so this would have been fertile ground for increased litigation."

In regards to the significance of the case, Sargent said that "a contrary decision would have been a significant blow to debt collectors," creating "a direct conflict among judges within the Northern District of Illinois."

Attorney Ryan Holz, also of Locke Lord, said, "Debt collectors can breathe a sigh of relief."

But  he recommends "debt collectors use 'N/A' if there is nothing due for a particular line item, and nothing will ever accrue on that line item," reducing the risk of litigation.

Holz said debtors "will need to understand that if they want to pursue a claim of this type, it will be an uphill battle," as some judges "will dismiss such claims outright" and others "will require the debtors to present extrinsic evidence that a statement with $0.00 line items is deceptive to the unsophisticated consumer, [making debtors] seem unable or unwilling to marshal the required evidence." 

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