N.J. Appeals Court Upholds Ruling Over Suit Filed During Pandemic

A New Jersey Appeals Court has upheld a ruling in favor of a debt collector that was sued for filing a collection lawsuit against an individual, after the individual claimed, among other issues, that the collector should not have been allowed to file suit during the pandemic because of a clause in the agreement with the original creditor barring collection actions in a disaster area.

A copy of the ruling in the case of Midland Credit Management v. Sipple can be accessed by clicking here.

The plaintiff purchased a portfolio of debts including two unpaid credit card debts owed by the defendant. The plaintiff unsuccessfully attempted to collect on the debts before filing suit against the defendant. The defendant answered the dispute and filed counterclaims of her own, accusing the plaintiff of violating the Fair Debt Collection Practices Act. Among her defenses was that collection agencies were barred by an executive order from initiating collection actions during the state of emergency related to the COVID-19 pandemic. A state court judge granted the plaintiff’s motion for summary judgment, which the defendant appealed.

On appeal, the defendant argued that some of the evidence used against her was improperly admitted and that the court erred in finding the executive order inapplicable. The defendant pointed to this clause in the agreement she had with the original creditor:

Without limiting the foregoing, [plaintiff] further represents and warrants that it shall: . . . (x) upon declaration by [the Federal Emergency Management Agency] or any appropriate local, state or federal agency that a location is a disaster area, [plaintiff] agrees to temporarily suspend its collection activities within said area until such time as is reasonable and practicable.

Calling the argument “baseless,” the Appeals Court noted that the defendant failed to present evidence that an “executive order prohibited the commencement and adjudication of debt collection matters during a state emergency related to the COVID-19 pandemic.” As well, the defendant did not establish “that there is a contractual bar to plaintiff filing a debt collection suit in a disaster area.”


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