Appeals Court Overturns Dismissal of FDCPA Suit Based on Description of Debt in Letter

The Court of Appeals for the Seventh Circuit has overturned a lower court’s dismissal of a Fair Debt Collection Practices Act case for lack of standing, ruling that the plaintiff had standing because he alleged a concrete injury — that interest was continuing to accrue on an unpaid judgment — by not acting on a settlement offer he received which did not mention that interest was accruing.

A copy of the ruling in the case of Chuluunbat v. Weltman, Weinberg & Reis can be accessed by clicking here.

The plaintiff defaulted on a credit card debt that was placed with the defendant for collection. The defendant sued the plaintiff and obtained a judgment for the unpaid debt. After unsuccessfully attempting to garnish the plaintiff’s wages, the defendant sent the plaintiff a letter, offering to settle the debt for 40 cents on the dollar. The letter, however, did not mention the judgment or interest. Instead, it mentioned that the “account” had a “balance due” of $4,212.90. Only after the plaintiff called the defendant and was told the balance was higher did he realize that interest was accruing on the debt.

The plaintiff sued, alleging the defendant violated Sections 1692e(2), 1692e(10), and 1692f of the FDCPA. In an amended complaint, the plaintiff said he would have sought to resolve the debt if he had known that it was increasing because of accruing interest. A District Court judge granted the defendant’s motion to dismiss, ruling the plaintiff did not allege he suffered a concrete injury.

On appeal, the defendant argued that the plaintiff had to have known that the debt referenced in the letter was referring to the judgment that had been obtained about him. It had the same credit card number and reference number as the judgment. But, the Seventh Circuit ruled, it was at least “plausible” that the plaintiff believed the letter referred to a balance, not a judgement, and that he might not have realized that the balance was increasing. “… if he did not understand that the letter was about the judgment at all, he may not have connected the dots the way Weltman thinks he should have,” the Appeals Court wrote.

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