The Consumer Financial Protection Bureau (CFPB) and the FTC both weighed in on March 5th in a case heard before the Sixth Circuit of Appeals that could change the way that debt buyers collect on time-barred debt. It seems as if the government regulators wish to limit some of the tactics that debt collectors sometimes use when they pursue debtors to pay on very old debt.
A joint amicus brief was filed by the CFPB and FTC in the Northland Group, Inc. case.
Northland Group, Inc. is a debt collection agency based in Minnesota and they counter that accusations that their collection efforts didn’t involve threats to sue and couldn’t have been misrepresented as such.
This is part of the claim against them.
In a complaint against Northland, it states that a letter was sent to a debtor that offered to settle her old debt. The debtor argues with agreement from the CFPB and FTC that because Northland stated in the letter that they were not obligated to renew the settlement offer, the debtor may have been made to believe that the company could take her to court over a debt that had passed the statute of limitations for such action to be taken. It could be considered a violation of the Fair Debt Collection Practices Act (FDCPA) if the letter made any kind of suggestion that the debtor could be sued. The FDCPA states that any misleading or deceptive representation during the collection process constitutes a violation.
One judge with the U.S. District Court judge did agree with Northland and dismissed the case, which is what lead to the appeal in the Sixth Circuit.
What is at stake in the matter, however, is how far debt collectors can go when trying to get consumers to pay into debt that they can’t legally enforce. Minnesota, just like every state, has a statute of limitations in order to prevent court cases and judgments after a specific period of time. However, a debt collector can try and make the debt new again. For instance, a person paying $1 toward their balance or simply admitting the debt can reset the clock on the debt. This means the consumer can be sued.
Unfortunately, many consumers are not aware of their rights and that makes it challenging to effectively handle time-barred debt. People are simply not informed of what their rights are under debt collection laws. An attorney experienced with fair debt collection laws and the Minnesota Attorney General’s website are great sources.
It is the hope of the CFPB and the FTC that the Sixth Circuit will make a way to help fill part of an information vacuum that will help consumers to become more informed. The FDCPA does set the bar for deception rather low, but sometimes abusive and deceptive acts during the debt collection process result in loud and clear violations. If ever in doubt, consumers can contact a FDCPA attorney who can answer their questions as to whether a violation occurred. If one did, consumers then have a right to report and pursue the agency for damages related to the violation of the consumer’s rights.