Judge Grants MSJ for Defendant in FDCPA Case Because Debt Was Not in Default When Placed

A District Court judge in Tennessee has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case, agreeing that the defendant does not meet the definition of debt collector under the statute, in large part because the plaintiff’s agreement with the creditor spells out the exact nature of the relationship between the creditor and the defendant.

A copy of the ruling in the case of Ward v. NPAS, Inc., can be accessed by clicking here.

The plaintiff incurred a couple of debts to a healthcare provider. When filling out paperwork prior to the procedures, the plaintiff signed a form acknowledging that the healthcare provider may use an extended business office (EBO) provider for billing and servicing. The form said that while the EBO was servicing the account, it “shall not be considered delinquent, past due or in default, and shall not be reported to a credit bureau or subject to collection legal proceedings.”

After sending two letters and leaving a voicemail for each of the two debts, the accounts were returned back to the creditor. But the plaintiff sued the EBO, claiming it violated the FDCPA because it failed to make a meaningful disclosure of its identity when it placed telephone calls to the plaintiff, failed to notify the plaintiff that it was attempting to collect a debt and that all information obtained would be used for that purpose; and failed to use its full “true name” in its voicemails where it referred to itself as NPAS and not NPAS, Inc.

The defendant claims it does not meet the definition of debt collector under the FDCPA because the debt was not in default at the time the account was placed with it. After pointing out that Congress should have defined what “default” means, Judge Aleta Trauger of the District Court for the Middle District of Tennessee, Nashville Division, noted that a number of other courts have ruled that NPAS does not qualify as a debt collector under the FDCPA.

“The plaintiff is erecting paper castles and storming them with paper horses,” Judge Trauger wrote. “As set forth above, even though Ward failed to pay her account while NPAS was handling it, pursuant to the Conditions of Admission agreement, Stonecrest would not deem or treat the account as ‘delinquent, past due or in default’ until NPAS’s efforts to obtain payment had been unsuccessful and it returned the account to Stonecrest. Ward’s accounts clearly were not in default — or past due or delinquent — when NPAS obtained them, and NPAS was still working the accounts when it made the telephone calls.”

Judge Trauger also easily dismissed the plaintiff’s arguments that the form was an attempt to circumvent the “strictures” of the FDCPA.

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