FTC filed amicus brief in debt collection appeal

[TigerD]

The Federal Trade Commission filed an amicus brief in the U.S. Court of Appeals for the Sixth Circuit, arguing that a federal district court erroneously dismissed a consumer’s class action complaint against a debt collector. Filed in the U.S. District Court for the Western District of Michigan, the complaint alleged that the collector’s letter violated the Fair Debt Collection Practices Act by implying that the consumer could be sued to collect the debt even though the statute of limitations on filing a collection lawsuit had expired.

The plaintiff, Michigan consumer Esther Buchanan, received a letter from a debt collector offering to “settle” a debt after Michigan’s six-year limitations period for taking legal action to collect on the debt had passed. Buchanan contends in her complaint that the collector’s letter, coupled with statements that the debt would continue to accrue interest and a warning that the collector was “not obligated to renew” the settlement offer, could mislead unsophisticated consumers into believing that they could still be subject to legal action. The district court dismissed the complaint on the grounds that the letter could not mislead even the least-sophisticated consumer.

The FTC’s amicus brief, filed jointly with the Consumer Financial Protection Bureau, explains the Commission’s extensive study of the debt-collection industry, including the problems associated with collecting debts beyond the statute of limitations. The brief argues that the debt collector’s offer to “settle” and other representations could plausibly cause an unsophisticated consumer to believe that the debt could be enforced through litigation, and that the complaint therefore should not have been dismissed.

http://www.ftc.gov/system/files/documents/amicus_briefs/esther-buchanan-v.northland-group-inc.no.13-2523-6th-cir./1403105buchanan6cir-amicus.pdf

DC

All of the above quoted from FTC news release.

 

[tranquility]

It must be pretty interesting to claim your class consists solely of unsophisticated consumers. Or, the "least sophisticated consumer."

"Yes, your honor, my clients are the least sophisticated you can imagine. Heck, they have me as their attorney!"

 

[justalayman]

ok DC, what is your perspective on this:


a statute of limitations is only a limitation if it is applicable. There are a variety of reasons in most states the SOL would be tolled ergo, a simple review of a calender compared to the date of delinquency is not necessarily proof the sol has run.

is a debt collector required to presume the sol has run simply based on the date or are they a required to be able to show, at least, basic evidence that the sol may have been tolled for a suit to go beyond summary judgment or dismissal based on an SOL defense. It is becoming obvious they are not being allowed to even gamble the SOL may not have run for some reason based on the decisions coming down through various courts.

Given the SOL is an affirmative defense, if seems it is limiting, without reason, to assert a collector simply cannot sue if the sol appears to have run. Why are the courts ruling that the mere presumed expiration of the SOL is adequate to prevent the collector from continuing to make collection efforts?

 

[TigerD]

ok DC, what is your perspective on this:
a statute of limitations is only a limitation if it is applicable. There are a variety of reasons in most states the SOL would be tolled ergo, a simple review of a calender compared to the date of delinquency is not necessarily proof the sol has run.

Starting with the basic principle that a statute of limitation is an affirmative defense and the truth that a lawyer should not knowingly file a suit outside of statute, there is argument on both sides of the case. A collector - even a collection agency - should not attempt to nor should they be required to discern all potential excuses a debtor may have ... I mean ... all possible tolling and exceptions to tolling that may apply. Therefore, I don't think a collector gains anything by discussing statutes of limitation with debtors. That said, the preceding statement of yours is one I with which I agree.

is a debt collector required to presume the sol has run simply based on the date or are they a required to be able to show, at least, basic evidence that the sol may have been tolled for a suit to go beyond summary judgment or dismissal based on an SOL defense. It is becoming obvious they are not being allowed to even gamble the SOL may not have run for some reason based on the decisions coming down through various courts.

The courts are increasingly making third party collections more difficult. This trend is disturbing for several reasons - 1) It rewards bad actors on both the collections side and the debtor side. When collectors are wrong regardless of wrongdoing, there is little negative impact of doing wrong. It becomes part of the cost of business. On the debtor side, debtors are being rewarded for becoming imbeciles that create traps for law-abiding collectors. 2) As the cost of collections rises, the cost of credit will also rise. This will push lower income people out of credit markets or further perpetuate the cycle of poverty. It is no accident that 571% loans are offered to poor people. Even mainstream financial institutions have gotten into usurious interest level, high risk lending. 3) Another side effect is the gradual end of collections as an immediate judicial remedy becomes favored. This is good for me (a student about to graduate) and other lawyers, but very bad for the average person who for some reason suffers a temporary hardship. That person will not be able to work with a collector and recover. Instead they will suffer the indignity of a lawsuit, the oppression of judicial enforcement, and the harsh reality that judgment enforcement is far worse on the debtor than a collector.

Given the SOL is an affirmative defense, if seems it is limiting, without reason, to assert a collector simply cannot sue if the sol appears to have run. Why are the courts ruling that the mere presumed expiration of the SOL is adequate to prevent the collector from continuing to make collection efforts?

Because poor people are stupid and they vote. Politicians get elected by the unwashed masses. It is the very reason our nation was set up as a republic and not as a democracy. In a democracy the race to the bottom always wins. That's what we are seeing now.

Frankly, poor people shouldn't have credit. If we are going to pass a law regarding debt and collections, the first law should be to ban loaning money to anyone an income of less than $50,000. Easy credit and instantaneous gratification have damaged the very soul of our country. Work and save was the national mantra until the post WWII era. As a society we need to return to that.

DC

 

[LdiJ]

Starting with the basic principle that a statute of limitation is an affirmative defense and the truth that a lawyer should not knowingly file a suit outside of statute, there is argument on both sides of the case. A collector - even a collection agency - should not attempt to nor should they be required to discern all potential excuses a debtor may have ... I mean ... all possible tolling and exceptions to tolling that may apply. Therefore, I don't think a collector gains anything by discussing statutes of limitation with debtors. That said, the preceding statement of yours is one I with which I agree.


The courts are increasingly making third party collections more difficult. This trend is disturbing for several reasons - 1) It rewards bad actors on both the collections side and the debtor side. When collectors are wrong regardless of wrongdoing, there is little negative impact of doing wrong. It becomes part of the cost of business. On the debtor side, debtors are being rewarded for becoming imbeciles that create traps for law-abiding collectors. 2) As the cost of collections rises, the cost of credit will also rise. This will push lower income people out of credit markets or further perpetuate the cycle of poverty. It is no accident that 571% loans are offered to poor people. Even mainstream financial institutions have gotten into usurious interest level, high risk lending. 3) Another side effect is the gradual end of collections as an immediate judicial remedy becomes favored. This is good for me (a student about to graduate) and other lawyers, but very bad for the average person who for some reason suffers a temporary hardship. That person will not be able to work with a collector and recover. Instead they will suffer the indignity of a lawsuit, the oppression of judicial enforcement, and the harsh reality that judgment enforcement is far worse on the debtor than a collector.


Because poor people are stupid and they vote. Politicians get elected by the unwashed masses. It is the very reason our nation was set up as a republic and not as a democracy. In a democracy the race to the bottom always wins. That's what we are seeing now.

Frankly, poor people shouldn't have credit. If we are going to pass a law regarding debt and collections, the first law should be to ban loaning money to anyone an income of less than $50,000. Easy credit and instantaneous gratification have damaged the very soul of our country. Work and save was the national mantra until the post WWII era. As a society we need to return to that.

DC

Do you really think that someone making say 35k a year shouldn't be able to get a mortgage on a little two bedroom house in rural USA costing 60k? When they can easily afford the payment? Or shouldn't be able to get a loan on a modest car if they can easily afford the payment?

Credit cards...that is a different story, but banning someone from all forms of credit because they don't make a certain amount of money seems a little over the top.

 

[justalayman]

.

Work and save was the national mantra until the post WWII era. As a society we need to return to that.

while I don't disagree with that statement, I believe this one is a bit too stringent:

the first law should be to ban loaning money to anyone an income of less than $50,000.

there are only a couple states with a per capita median income over $50k. That means over half of the country could not borrow money. That would kill the banks as well as many other industries.





and depending on how you define loan, it could mean no medical treatment for anybody earning under $50k since they are unlikely to be able to pay cash for the services or, if there is insurance, even paying the deductible or co-pays is problematic.

I guess that last one would eventually reduce the number of poor people wanting to borrow money though.

 

[TigerD]

Do you really think that someone making say 35k a year shouldn't be able to get a mortgage on a little two bedroom house in rural USA costing 60k? When they can easily afford the payment? Or shouldn't be able to get a loan on a modest car if they can easily afford the payment?

Credit cards...that is a different story, but banning someone from all forms of credit because they don't make a certain amount of money seems a little over the top.

Why? If you have no income, no savings, and no assets, why should we let you sell yourself to the slavery of debt?

DC

 

[TigerD]

there are only a couple states with a per capita median income over $50k. That means over half of the country could not borrow money. That would kill the banks as well as many other industries.

No, it would change the way banks make their money. Instead of from "poor people" fees and loan interest, banks would have to return to sound investing and building businesses. Frankly, more than half the country should not have access to credit.

and depending on how you define loan, it could mean no medical treatment for anybody earning under $50k since they are unlikely to be able to pay cash for the services or, if there is insurance, even paying the deductible or co-pays is problematic.

Or, they could save money for emergencies. And pay cash.

I guess that last one would eventually reduce the number of poor people wanting to borrow money though.

Yes, but not in the way you mean. It would reduce the number of poor people - period. Because, those people that learned habits of saving would not readily give them up.

Here is a question: Why is the concept of paying cash so unfamiliar to everyone? Shouldn't that alone, be a wake up call?

DC

 

[LdiJ]

Why? If you have no income, no savings, and no assets, why should we let you sell yourself to the slavery of debt?

DC

Someone making 35k a year HAS income. Buying a modest home or a modest car is not letting someone sell themselves into the slavery of debt. It is allowing them the opportunity to amass wealth rather than having to pay rent for their entire lives with nothing to show for it. It is allowing them the necessary transportation (particularly in rural America) to enable them to seek the best employment they can obtain.

Yes, prior to the housing crash the real estate market/banking industry was out of control and allowed people to take on far more debt than they could realistically service...all based on the assumption that real estate values would continue to climb unchecked.

However huge numbers of people who make under 50k a year have managed to keep their homes even through the crisis...they have managed to keep their cars.

In my city someone with a 35k income would have to pay at least 800.00 a month to rent a place with three bedrooms, yet could end up with a house payment of 500.00 a month in a decent working class neighborhood...AND they would be building equity in that house. Which one is really slavery?

Its incredible elitism to assume that in every part of the US that someone making under 50k doesn't have a healthy income. People in Bedford, Indiana (for example) live better on 40k in income than people in NYC live on 100k...heck maybe even better than people living on 150k in NYC.

I respect most of your posts on these forums, but now you are demonstrating an elitism and makes no sense logically.

 

[TigerD]

Someone making 35k a year HAS income. Buying a modest home or a modest car is not letting someone sell themselves into the slavery of debt. It is allowing them the opportunity to amass wealth rather than having to pay rent for their entire lives with nothing to show for it. It is allowing them the necessary transportation (particularly in rural America) to enable them to seek the best employment they can obtain.

Yes, prior to the housing crash the real estate market/banking industry was out of control and allowed people to take on far more debt than they could realistically service...all based on the assumption that real estate values would continue to climb unchecked.

However huge numbers of people who make under 50k a year have managed to keep their homes even through the crisis...they have managed to keep their cars.

In my city someone with a 35k income would have to pay at least 800.00 a month to rent a place with three bedrooms, yet could end up with a house payment of 500.00 a month in a decent working class neighborhood...AND they would be building equity in that house. Which one is really slavery?

Its incredible elitism to assume that in every part of the US that someone making under 50k doesn't have a healthy income. People in Bedford, Indiana (for example) live better on 40k in income than people in NYC live on 100k...heck maybe even better than people living on 150k in NYC.

I respect most of your posts on these forums, but now you are demonstrating an elitism and makes no sense logically.

Let's address this:
$35,000 annual salary.
After tax deduction, a take home of $26,250
Health insurance (employer or on market) $4800 annual (assuming $400 a month, which is pretty fair given the current rates)
After taxes and insurance 21,450 or 1787.50/month
"Modest" car loan payment $299/month
Car insurance $100/month
Mortgage $625/month (includes taxes and insurance and pmi)
Housing maintenance and repairs budget $155/month
Monthly outlay thus far $1189 or a 66 percent debt to income ratio.

Assuming a $62,000 house with 0% down.
This does not yet account for water, sewer, electric, natural gas, gas for the car, credit cards, cable TV, internet, entertainment, clothes, medical deductibles, medication, car repairs, tires, oil changes, vacations, Christmas, student loans, or other educational activities. Add kids and family and this number goes through the roof.

A person with a $35k salary cannot afford credit. It isn't being an elitist. It is being proficient in basic math. I used to collect against these people all the time. They live paycheck to paycheck and the smallest bump puts them in collections.

DC

ADDED: Paying cash for a car is far more logical. A new car depreciates 25% the minute you drive off the lot. The best deals are four-five year old cars bought with cash.

Also, Good luck finding banks that will loan $50k or less on a mortgage -- especially to a low income borrower.