The bureau is supporting a consumer’s appeal of a court ruling that the debt collector did not violate the FDCPA by sending the letter.
01/05/2024 1:25 P.M.
2 minute read
The Consumer Financial Protection Bureau has filed an amicus brief in a consumer’s appeal of a decision that a debt collection letter they received in bankruptcy did not violate the Fair Debt Collection Practices Act.
The case, Carrasquillo v. CICA Collection Agency, Inc. (PDF) was decided in 2022 in the U.S. District Court for the District of Puerto Rico.
A consumer received a collection letter while he was in bankruptcy. The debt in question had been claimed in the bankruptcy, ACA International previously reported.
The consumer claimed that the debt collector knew or should have known that he was in active bankruptcy when it sent the letter and sued the debt collector. The consumer alleged that by sending the letter, the debt collector violated several provisions of the Fair Debt Collection Practices Act. The debt collector moved to dismiss the case.
The court began its decision by reviewing the collection letter that was sent to the consumer. The court found that the debt collector, who had not been informed of the bankruptcy by the creditor, violated the automatic stay unknowingly. The court stated that, “Without notification by [the creditor] or the [b]ankruptcy [c]ourt, there is simply no way [the debt collector] could know of the bankruptcy filing. Therefore, there was no knowledge or intent by [the debt collector].”
The consumer appealed in the U.S. Court of Appeals for the First Circuit.
In its amicus brief (PDF), the CFPB notes that “a debt collector can be liable under the Fair Debt Collection Practices Act even if they claim that they did not know that their statement was false. A debt collector will not be held responsible in a lawsuit brought by an individual if they can show that they didn’t intend to make the false representation and that they had effective procedures in place designed to prevent the mistake … This interpretation has been upheld by numerous courts, and it is what Congress clearly intended.”
Debt collectors who want to take a more cautious approach to potential bankruptcy filings may want to conduct bankruptcy scrubs to avoid potentially sending a collection letter to a consumer who has filed bankruptcy.