The 6th Circuit Court of Appeals reversed a District Court’s decision and issued a significant opinion in Van Hoven v. Buckles & Buckles, P.L.C., __ F.3d __, 2020 WL 239290 (6th Cir. Jan. 16, 2020). In Van Hoven, the court held that due to the unsettled interpretation of the law it was not improper to add court cost to the balance of a wage garnishment filed with the court and that the inclusion of previous court costs associated with previous garnishments, although not permissible, may be subject to the bonafide error defense which must be further reviewed by the lower court. To quote the Court, “Just as a lawyer does not ‘misrepresent’ the facts by making a factual contention later proved wrong, a lawyer does not ‘misrepresent’ the law by advancing a reasonable legal position later proved wrong.” Id., at p. 9. The Court went on to say “Legal contentions must be objectively baseless, not just later proved wrong, to be actionable under the [FDCPA].” Id. The Van Hoven holding is consistent with precedent from other Circuits and encourages creditors’ counsel to advance reasonable interpretations of unsettled law. The National Creditors Bar Association (which KWA is a proud member of) filed an amicus brief in support of reversal and has published a more in-depth article. To review their article, please visit: NCBA Member Bulletin, “Court Rules in Favor of NCBA Member Firm.”
Heir Who Pays Utilities for Home Inherited from Father Is Not a Consumer Under the FDCPA
A basic premise of debt collection law is that a creditor cannot collect a debt from someone whom does not owe that debt. However, what if one were to flip that premise? What if a person whom didn’t owe a debt filed suit under the FDCPA against a law firm which previously filed an “in rem” foreclosure action and named that person as a party in the foreclosure action? Read more
A New Barrier: the Least-Sophisticated Consumer & Language Barriers
A majority of federal court circuits have adopted the least-sophisticated consumer standard in analyzing Fair Debt Collection Practices Act (FDCPA) claims. The least-sophisticated consumer standard is to ensure that the FDCPA protects gullible as well as shrewd consumers. Creditor Rights advocates have had to contend with this standard, which essentially lowers the burden for a consumer, for years. Although the standard provides deference to the consumer, it is still fairly objective; it merely asks whether the least sophisticated consumer would have been misled by the actions of the debt collector. Read more
House Bill Would Exempt Collection Attorneys Engaged in Litigation from the FDCPA
A bill that was recently introduced in the House of Representatives would exempt debt collection attorneys from the Fair Debt Collection Practices Act (FDCPA) “when taking certain actions.” The Bill, which was introduced by Rep. Ed Perlmutter (D-Colo.) and co-sponsored by Rep. Spencer Bachus (R-Ala.), is described as a technical fix that does not erode the consumer protections afforded by the FDCPA. Read more
Prevailing Debt Collector Can Recover Costs in FDCPA Suit Without A Finding of Bad Faith
In what some have characterized as a defeat for the Consumer Financial Protection Bureau (CFPB), the United States Supreme Court has ruled that a prevailing defendant in a FDCPA suit can recover costs without having to show that the suit was filed in bad faith or for the purpose of harassment. This decision not only represents a rejection of the position that was taken by the CFPB and the FTC in a jointly filed amicus brief, but it should also serve to discourage frivolous nuisance suits claiming violations of the FDCPA. Read more
Mortgage foreclosure is debt collection under the FDCPA
Last June, the Sixth Circuit decided that a law firm could be liable, under the Fair Debt Collection Practices Act (“FDCPA”), for stating the wrong identity of the mortgage owner in a foreclosure complaint. In effect, the Sixth Circuit held that a pre-assignment foreclosure filing could violate the FDCPA. Earlier this month, the same court decided another case involving the application of the FDCPA to judicial foreclosure proceedings. This latest case strongly suggests that misstatements in a foreclosure complaint, and presumably other court filings, subject not only the plaintiff’s attorney to the FDCPA, but the loan servicer client as well.
Pre-assignment foreclosure filing may violate the Fair Debt Collection Practices Act
The Sixth Circuit Court of Appeals, in Wallace v. Washington Mutual, recently announced that filing a foreclosure complaint, before the note and mortgage have been transferred and assigned to the Plaintiff, may violate the Fair Debt Collection Practices Act (the “FDCPA”). More importantly, the court noted that the FDCPA may be violated even if state law permits the Plaintiff to cure a real-party in interest defect after the complaint is filed. Finally, although the defendant in this case was the law firm that represented the foreclosure plaintiff, depending on the circumstances, a servicer may be liable under the same theory that was announced by this court.