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Uncontrollable Debt and Stress

July 26, 2019

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Is a company that purchases debt for its own account a 'debt collector' as defined under the Fair Debt Collection Practices Act?

 

 

There are companies that purchase debt for a minimal amount and then try to collect the debt for its own account.  Suppose that company uses collection practices that would violate the Fair Debt Collection Practices Act (FDCPA).  Could you file a lawsuit against that company for its collection practices if you could prove that they violated the FDCPA?  Moreover, would a company that purchases debt for its own account, and attempts to collect on that debt be considered a 'debt collector' as defined under the FDCPA?   The U.S. Supreme Court in Henson v. Santander Consumer USA Inc., 582 U.S._____ (2017),  rendered a slip opinion on that very same issue. 

 

The Court focused its analysis on the term 'debt collector(s)' as defined in 15 U.S.C. §1692a(6) of the FDCPA.     Specifically, the Court zeroed in on the line that refers to a debt collector as one who 'regularly collects or attempts to collect . . .debts owed or due . . .another'.   Page 2   Both parties to the suit, agreed that third party debt collectors would be considered debt collectors as defined by the act, and that persons collecting debts based on the notion that the debt originated with them as loan originators would not.  Page 2.

 

The Court reasoned that when a company purchases debt for its own account and attempts to collect on that debt, from a definitional point, the company is not collecting 'debt(s) owed . . .another' (i.e. third party debt collector agent).  Because 'you have to attempt to collect debts owed another before you can ever qualify as a debt collector'.  Page 8.  Thus, when a company purchases defaulted debt for its own account, 'would hardly seem to be barred from qualifying as a creditor under the statute's plain terms'.  Page 8

 

The Court essentially looked no further than the plain language of the definition of 'debt collector(s) as those who regularly seek to collect debts owed . . .another', and reasoned that it means exactly what it states and that 'while it is  . . .our job to apply faithfully the law Congress has written, it is never our job to rewrite a constitutionally statutory text'.  page 9.     Thus, the Court held a company that purchases defaulted debt for its own account and seeks to collect on that debt is not considered a debt collector(s) as defined under the FDCPA.  Therefore, based on that Supreme Court ruling, even if that company used questionble debt collection methods that would violate the FDCPA, since that company is not considered a 'debt collector', you have no claim under the act. 

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