This article was written by Lemberg Law staff, and reviewed by Sergei Lemberg, the managing attorney of Lemberg Law.
Yes. Debt collectors can sue consumers in order to recover overdue debts. However, the FDCPA prohibits collection agencies from threatening to sue when they don’t have the ability or intention to do so.
It’s understandable that people become anxious and on edge when debt collectors send collection letters or exert pressure over the phone to make payments. That anxiety increases exponentially when a debt collector threatens to sue in order to collect the debt.
Can a collection agency take you to court?
A debt collection agency can take you to court under some circumstances, such as when:
- The creditor wants to continue collection efforts.
- The collection agency has an in-house legal department.
- The agency hands off the account to a debt collection law firm.
In order to better understand when it’s possible for a collection agency to sue you, it’s helpful to look at debt collection lawsuits through the lens of the federal Fair Debt Collection Practices Act (FDCPA). The FDCPA and related caselaw paint bright lines regarding actions debt collectors can and can’t take when it comes to suing and threatening to sue consumers.
For example, under the FDCPA (15 U.S.C. 1692e(3)), a debt collector can’t tell you that they’re an attorney when they aren’t, nor can they imply that written communication is from an attorney when it isn’t. In Clomon vs. Jackson, an agency’s general counsel (the attorney for the company) allowed the debt collection agency to send collection letters under his name and signature – even though he didn’t personally review the accounts. The court found that this was a violation of the FDCPA because the collection letters weren’t in any meaningful way from an attorney.
The ability and intention of a collection agency to sue you
The FDCPA dictates that a debt collector can’t threaten to take any action that they don’t intend to take or that can’t be taken. This provision, 15 U.S.C. 1692e(5), is an umbrella for several different kinds of threats. For example, in Edwards vs. McCormick, McCormick threatened to foreclose on Ruth Edwards’ house, even though state law prohibited McCormick from doing so. The court found that this threat was a violation of the FDCPA. In Jeter vs. Credit Bureau, the debt collection agency sent a letter to Ms. Jeter that threatened to take legal action if Ms. Jeter didn’t respond. The agency sent a second letter threatening legal action if she didn’t respond in five days. Credit Bureau never took legal action and was found to be in violation of the FDCPA. In other words, even if a collection agency has the ability to sue you, they can’t threaten to do so if they don’t intend to follow through.
This provision of the FDCPA is also applicable to time-barred debt and to debts discharged in bankruptcy. Although each state’s statute of limitations is different (and may also differ depending on the type of debt in question), there is a time after which a debt is no longer legally enforceable. That means that, if a debt is past the statute of limitations, a debt collection agency cannot legally sue you in order to collect the debt. If they threaten to take you to court, it’s a violation of 15 U.S.C. 1692e(5). The same holds true for debts that are discharged in bankruptcy. Once a debt is discharged, it is uncollectible. The threat of lawsuit by a debt collector is a violation of the FDCPA.
How do I fight back against collector lawsuit threats?
If a debt collection agency has threatened you with a lawsuit, you need to know that you have rights under the FDCPA. You can turn the tables on the debt collection agency and sue them in court. The FDCPA says that consumers who prevail are entitled to up to $1,000 in statutory damages. The law-breaking debt collection agency will be forced to pay attorney fees and court costs. This is the reason that consumer attorneys typically don’t charge clients who have been harassed by debt collectors.
Lemberg Law has a team devoted to representing people who have been harassed, threatened, deceived, or abused by debt collectors. Call and set up a free consultation at 844-685-9200 or submit the online request form.
So… can debt collectors sue you? Yes, and we may be able to help.
Clomon vs. Jackson, 988 F.2d 1314 (2d Cir. 1993)
Edwards vs. McCormick, 136 F. Supp. 2d 795 (S.D.Ohio 2001)
Jeter vs. Credit Bureau, 754 F.2d 907 (11 Cir. 1985)
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