‘Vague’ BK Reference Kills Hunstein Class Action

It’s not an option open to every defendant, but a defendant has found one way to defeat a Hunstein copycat case — a vague disclosure made during a bankruptcy filing.

A copy of the ruling in the case of Dervitz v. ARS National Services can be accessed by clicking here.

The plaintiff filed a class-action suit against the defendant in December 2021, alleging it violated the Fair Debt Collection Practices Act by using a third-party vendor to print and mail a collection letter to her.

Three months later, the plaintiff filed for Chapter 7 bankruptcy protection and was required to disclose all of her assets. Among the disclosures were whether she had any claims against third parties or whether or she he had filed a lawsuit or made a demand for payment. The plaintiff did not make any such disclosure. Later in her petition, the plaintiff was asked about the value of any contingent or unliquidated claims, and she answered that she had an FDCPA claim worth $1,000 in statutory damages with actual damages that were unknown.

The defendant used that petition as the basis for its motion to dismiss, arguing that the plaintiff misrepresented her claim against the defendant — a position that which Judge Susan D. Wigenton of the District Court for the District Court of New Jersey agreed.

The plaintiff “had a motive to conceal” her claims “in order to discharge her debts in the bankruptcy proceeding,” Judge Wigenton noted, adding that the plaintiff was represented by counsel before the Bankruptcy Court and that she could not explain why the claim was not disclosed in her petition.

“… the Court can only infer from Plaintiff’s vague and incomplete description of these claims that Plaintiff misrepresented her assets to the Bankruptcy Court in bad faith,” Judge Wigenton ruled.

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