A District Court judge in California has denied a defendant’s argument that it does not meet the definition of a debt collector under the Fair Debt Collection Practices Act and ruled that the plaintiff’s claims can proceed. The defendant, who argued that it was exempt from the FDCPA, failed to convince the court, which found sufficient allegations that the defendant was operating as a debt collector when it attempted to collect a debt from the plaintiff.
The background: The case was filed after the plaintiff alleged that the defendant continued to attempt collection activities even after the plaintiff had filed for Chapter 7 bankruptcy protection. The defendant attempted to collect the debt using a different name, which implied that an independent third party was involved. The plaintiff had listed the debt owed to the defendant in his bankruptcy filing, and the bankruptcy court issued a discharge order, notifying all creditors, including the defendant.
- Despite this discharge, the plaintiff alleged that the defendant continued to try to collect on the debt and did not properly update credit reporting agencies about the debt’s discharge.
- Additionally, the plaintiff claimed that he had notified the defendant that he was now being represented by an attorney and had explicitly requested that all communications cease. Despite these notifications, the plaintiff allegedly received multiple communications from the defendant, including phone calls, which led to the plaintiff filing claims for violations of the FDCPA, the Rosenthal Fair Debt Collection Practices Act, the Telephone Consumer Protection Act, and the Fair Credit Reporting Act, among others.
The ruling: The defendant filed a motion to dismiss, arguing that it was not a “debt collector” under the FDCPA, as it was primarily a loan servicer and had acquired the plaintiff’s debt before it went into default. However, Judge Marilyn L. Huff of the District Court for the Southern District of California denied this part of the motion, determining that the plaintiff’s allegations were sufficient to establish that the defendant was acting as a debt collector. Specifically, the defendant was using a different name when attempting to collect the debt, which indicated that it was presenting itself as a third-party debt collector.
- Judge Huff found that the use of a different name by the defendant suggested an attempt to create the impression that an independent third party was involved in the debt collection.
- The judge dismissed the claims related to alleged violations of the Fair Credit Reporting Act and the plaintiff’s FDCPA claims tied to the violation of the bankruptcy discharge order.
- However, the claims related to continued communications after the plaintiff had requested them to stop were allowed to proceed, as these did not depend on the bankruptcy discharge but rather on the defendant’s conduct in disregarding the plaintiff’s requests.
