DEBT RELIEF LAW CENTER
Attorney N. James Turner Can Help
Stop The Harassment!
Attorneys were originally exempt from the purview of the Act, but became subject to the Act in 1986 if they otherwise satisfied the definition of a debt collector (15 U.S.C. §1692a(6)) and did not qualify for one of the six statutory exemptions:
any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.
As a result of the change in the law, there are instances in where attorneys will be considered “debt collectors” and subject to compliance with the Act.
Glazer v. Chase brings the application of the FDCPA to attorneys into focus. That case involved a claim under the FDCPA against a mortgage servicing company and the law firm it hired to foreclose on property Glazer inherited. While the 6th Circuit upheld the district court's dismissal of the FDCPA claims against the servicer – because the proof showed the servicer entered on the scene when the debt was still current, which qualified for one of the FDCPA exceptions to the "debt collector" definition – it reversed the dismissal against the lawyers. The claim against the lawyers was that they violated the Act by falsely stating that Chase owned the note and mortgage in the foreclosure complaint (apparently, FNMA owned the debt pursuant to an unrecorded assignment, and Chase was solely the servicer), improperly scheduling a foreclosure sale (which was ultimately canceled) and refusing to verify the debt upon the debtor's request.
In upholding the claims against the lawyers, the 6th Circuit cited that the Act was unclear because it failed to define "debt collection" and did not exclude foreclosure or the general enforcement of security interests from its scope. And, the Court rejected what it characterized as the majority view adopted in many district courts that mortgage foreclosure, without a claim for a money judgment in the foreclosure complaint, is not debt collection, but simply enforcement of a security interest.
Despite the absence of a definition of "debt collection" in the Act, the panel examined the Act's definition of "debt" which is defined as "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes." 15 U.S.C. §1692a(5). Further, the Court focused upon the Act's substantive provisions that debt collection is performed through either "communication" or "conduct" (§ 1692c, d), which it found to be an indication of a very broad view of what could be considered "collection" under the statute. As to the argument that enforcement of a security interest should be distinguished, the panel stated, "The focus on the underlying transaction indicates that whether an obligation is a 'debt' depends not on whether the obligation is secured, but rather on the purpose for which it was incurred," concluding that a home loan was a "debt" whether or not secured.
STARTED SINCE 1990
Orlando Consumer Rights Lawyer - providing aggressive and affordable professional services to consumers who have been victims of debt collection harassment by debt collectors and auto fraud, to residents in Orlando, Kissimmee, and throughout the Central Florida Area.