Court Says Debt Collectors May File Lawsuits Without Intending to Go to Trial

Do debt collectors who file collection lawsuits need to intend to see those cases all the way to trial? This is the question answered by a federal court of appeals addressing the issue of whether it is a violation of the Fair Debt Collection Practices Act (FDCPA) if a debt collector files a lawsuit it does not actually intend to follow through on.

May debt collectors file such lawsuits in the hopes that the consumer will not respond to the complaint, which then allows the collector to get a court judgment against them without having to provide proof of the debt.

debt collectors lawsuit

No, ruled the Seventh Circuit Court of Appeals, debt collectors need not intend to go to trial, because just like most people who file lawsuits they are entitled to the hope of resolving the case by other means.

The lawsuit was filed against three major debt collectors, CACH, LLC, Cavalry Portfolio Services, LLC, and Unifund CCR Partners. They had all dismissed their cases against consumers before trial.

The consumers’ argument was that that the act of filing a lawsuit includes an implied “threat” that the case will go to trial. So, if the debt collector does not actually intend to try the case, the act of filing the lawsuit violates the FDCPA.

The FDCPA prohibits debt collectors from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. This includes making a “threat to take any action that cannot legally be taken or that is not intended to be taken.” 15 U.S.C. § 1692e(5).

Rejecting the consumers’ argument, the court explained that “the mere filing of a civil action does not include an implicit declaration that the plaintiff intends to advance the action all the way through trial.” There are many reasons someone may not want to go to trial, such as inconvenience or costs. Furthermore, nothing in the debt collectors’ court filings expressly stated that the debt collector intended to go to trial. In these respects, “debt collectors who sue to recover a debt are no different from any other plaintiff.” Nothing the debt collectors did was “false, deceptive, or misleading.”

It is important to note that just because a debt collector dismisses its case it does not mean that there are not potential other illegal threats or other unlawful conduct. If you have been sued by a debt collector, a licensed attorney can review your case to see if other violations have been committed

The court’s full decision is here: St. John v. CACH, Cavalry, and Unifund

Culik Law defends consumers who have been sued by debt collectors in Massachusetts state court. Contact us today to see if we can help you.

Joe Culik

Joe 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.