Debt Collector Tries to Force Sale of Consumer’s FDCPA Claim Back to the Debt Collector Itself, But is Rejected by Appellate Court

debt collector consumer fdcpaIn an unusual maneuver, a debt collector tried to use its judgment against a consumer to forcibly sell her FDCPA claim against the debt collector, which the debt collector itself was then going to purchase. That is, the debt collector tried to buy the FDCPA lawsuit against itself.

Originally, the debt collector, CCCS, filed a collection lawsuit against the consumer, which it won by default, resulting in a judgment.

The consumer later filed a lawsuit under the Fair Debt Collection Practices Act (FDCPA) for sending a misleading collection letter.

In response to the FDCPA lawsuit, CCCS used the courts to try to force her to sell this claim back to CCCS. Under state law, an unpaid judgment (such as the collection judgment against the consumer in this case) can be collected by forcing a sale of the consumer’s assets. Here, the pending FDCPA claim constituted an “asset” which CCCS tried to force the sale of, purchasing the FDCPA claim against itself.

Now that the debt collector owned the FDCPA claim, it argued that the claim should be dismissed since the consumer no longer had it.

The appellate court didn’t buy this argument. This is a ploy that has rarely been attempted by debt collectors, and with good reason, as it was rejected in its entirety.

The court ruled that to allow this strategy would undermine the FDCPA. Debt collectors may not force “a debtor’s claims to be auctioned, acquiring the claims, and dismissing them.” The court explained that this “would thwart enforcement of the FDCPA and undermine its purpose.”

A copy of the decision is here: Arellano v. CCCS

Although this decision addresses a unique situation, it reinforces the basic principle that debt collectors are not permitted to use tricks and traps to try to undermine the protections granted by the Fair Debt Collection Practices Act.

If you have been subjected to unfair or deceptive practices by a debt collector, contact Culik Law to see how we can help. Culik Law is a consumer protection law firm located in Boston, Massachusetts. Our attorneys represent clients in Massachusetts against debt collectors.

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 individual personal injury. He has advocated for individuals against some of the largest companies in America and has a passion for helping people uphold their rights against impossible odds. He has filed both individual and class-action lawsuits against most of the major banks, against some of the biggest debt collectors and credit reporting agencies, as well as insurance companies and corporate employers. Contact Joe