A District Court judge in Kansas has denied a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act by applying a payment from an individual to multiple debts, including one where the statute of limitations had expired, thus re-starting the clock and allowing the defendant to file its own suit against the plaintiff in an attempt to collect.
A copy of the ruling in the case of Donahue v. Probasco & Associates, P.A., can be accessed by clicking here.
The plaintiff incurred three debts to a healthcare facility. The defendant sued, and obtained a judgment, on one of the debts, which was incurred in 2002. One of the other debts was incurred in 2006, a fact which will become important in a minute. The plaintiff filed for bankruptcy protection in 2013, listing the healthcare facility as a creditor.
In November 2017, the plaintiff contacted the defendant and offered a payment of $50 toward the 2002 judgment. The defendant persuaded the plaintiff to make a payment of $75, which would be spread across the three unpaid debts. The defendant did not inform the plaintiff that making a payment on the 2006 debt would re-start the five-year statute of limitations on collecting debt in Kansas. Four months after the payment was received, the defendant filed suit against the plaintiff for the 2006 debt.
The defendant argued that including the debt on her bankruptcy filing acknowledged the debt under Kansas law and restarted the statute of limitations and the defendant was within its right to file suit. Judge Carlos Murguia of the District Court for the District of Kansas, however, did not see it that way.
Looking at a similar ruling from a case in South Carolina, which has a similar law to Kansas, a Bankruptcy Court judge ruled listing a debt on a bankruptcy schedule is not equivalent to making a promise to repay the debt. Therefore, listing the debt did not restart the statute of limitations and the judge allowed the plaintiff’s claim to move forward.
