A Debt Collection Letter Violates the FDCPA If It Doesn’t Disclose that Making a Payment Might Revive the Statute of Limitations

debt collection statute of limitationsDebt collectors often send collection letters asking for consumers to make voluntary payments on accounts that are past the statute of limitations. If a letter asks for payment, however, it must tell the consumer that paying the debt might revive the statute of limitations and make it collectible again. Otherwise, the debt collector is liable for violating the Fair Debt Collection Practices Act (called the FDCPA).

So says at least one federal judge, who reviewed a collection letter sent by Midland Credit Management (also known as MCM) on behalf of Midland Funding. MCM sent a collection letter after Midland Funding had supposedly purchase a Citibank credit card account owned by a consumer. The letter was clear to the extent that it disclosed the debt was past the statute of limitations, saying “The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it.” It is legal for a debt collector to ask for voluntary payment, which is what MCM asked for.

But the letter was not clear in that it did not disclose to the consumer that making any payment would probably start the clock over on the statute of limitations – potentially, allowing it to be collected for years more, even in court. Because of this, the consumer filed a lawsuit for violation of the FDCPA. The FDCPA prohibits debt collectors from making misrepresentations when collecting debts.

Why was it a misrepresentation? Because when a statement by a debt collector to a consumer is incomplete, it is usually deemed a misrepresentation. Here, even though MCM said it would not sue on the debt, the consumer would have revived the legal claim against her if she paid even a dollar. Moreover, MCM could then sell the account to another debt collector to collect or even sue the consumer.

The court also ruled that this was a violation of another provision of the FDCPA that prohibits using “false representations” and “deceptive means” to collect debts.

The lesson from this case is that it’s important to read closely any correspondence from debt collectors. Not only might you be waiving your legal rights by doing what they ask of you, they could even be committing a violation of the FDCPA.

The case is available here: Smother v. Midland Credit Management

Culik Law represents consumers against debt collectors such as Midland Credit Management and Midland Funding. Whether the case is just in collections and needs to be settled, or you’ve been sued in court, contact us to see if we can help.

Josef Culik

Josef Culik

Attorney Joe Culik has built his reputation on helping people and has dedicated his practice in Boston, Massachusetts to consumer protection, employee rights, and small business and franchise law.