Court case on suing on stale debt -- violates FDCPA

Posted by Bear (12.15.123.132) on October 27, 2002 at 16:29:25:

In Reply to: Re: DANGEROUS POSTS posted by scott on October 27, 2002 at 11:46:41:

A good case discussing the issue is from the United States Court of Appeals for the Eighth Circuit (covering states of AR, MO, IA, MN, ND, SD, NE). The case is Freyermuth v. Credit Bureau Services, Inc., 248 F.3d 767 (8th Cir. 2001). The case is way too long to reprint here. It is available on the Court’s web page at http://www.ca8.uscourts.gov/opndir/01/04/002661P.pdf

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The consumer lost in that case because of the 1-year limitation period for FDCPA claims. On the issue of suing over a stale debt, the important language is in part II of the opinion; some of part II is reprinted below. Note that the Court distinguishes between trying to collect the stale debt (not a violation in that circuit) and suing or threatening to sue (would be a violation, but didn’t happen in this case). However, the Court also cites one case (in IL) where even trying to collect is a violation.

“The case law on this issue focuses on the debt collector's actions, and whether an unsophisticated consumer would be harassed, misled or deceived by them. In Kimber v. Fed. Fin. Corp., 668 F.Supp. 1480 (M.D. Ala. 1987), the court held that the debt collector's filing of a lawsuit on an apparently time-barred debt, without having first determined after a reasonable inquiry that the limitations period had been tolled, was a violation of the FDCPA. Subsequent cases have similarly turned on the threat, or actual filing, of litigation. See Beattie v. D.M. Collections, Inc., 754 F.Supp. 383, 393 (D.Del. 1991)(threat of lawsuit which debt collector knows or should know is time-barred is violation of FDCPA); Aronson v. Commercial Fin. Serv., 1997 WL 103818, *3 (W.D. Pa)(no FDCPA violation where no lawsuit threatened, and language of letters tracked language of statute); Shorty v. Capital One Bank, 90 F.Supp. 2d 1330, 1332 (D.N.M. 2000)(no FDCPA violation where no lawsuit or further collection action threatened); Johnson v. Capital One, 2000 WL 1279661, *1 (W.D.Tex.)(no violation of the FDCPA where creditor only expressed intent to pursue lawful collection attempts).

“Only one court has found a violation of the Act in the absence of an express threat of litigation when a creditor attempts to collect on a time-barred debt. See Stepney v. Outsourcing Solutions, Inc., 1997 WL 722972, 4 (N.D. Ill.)(FDCPA claim stated where collection notice promised "no further collection action" if the time-barred debt was paid). Here, no legal action was taken or even threatened. As several cases have noted, a statute of limitations does not eliminate the debt; it merely limits the judicial remedies available. We decline to extend the reasoning of Kimber, and hold that, in the absence of a threat of litigation or actual litigation, no violation of the FDCPA has occurred when a debt collector attempts to collect on a potentially time-barred debt that is otherwise valid.”

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