A federal judge in Illinois has granted a summary judgment motion for a class-action lawsuit against Midland Credit Management because a collection letter sent by Midland did not provide enough warning that a payment on a time-barred debt would re-start the statute of limitations clock on that debt.
Midland had been seeking to have certain portions of the plaintiff’s Statement of Facts stricken from the document, because the plaintiff did not adequately illustrate that the incurred debts were for personals, family, or household purposes, as required under the Fair Debt Collection Practices Act, but the judge denied the motion.
A copy of the ruling can be accessed here.
The collection letter in question included the following disclosure:
The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it, we will not report it to any credit reporting agency, and payment or non-payment of this debt will not affect your credit score.
Midland attempted to use a District Court ruling in Kansas on virtually the same grounds in this case, but the judge warned that the Seventh Circuit Court of Appeals read a precedential ruling differently than the District Court and the judge in the Illinois case ruled that any court in the Seventh Circuit “must indeed warn of a potential revival of a time-barred claim.”
Midland also tried to use its policy of never re-starting the statute of limitations on debt after a payment has been made as reason for not granting the summary judgment, but the judge noted that the re-starting is a matter of law and not policy.
Midland even went as far as to quote the Consumer Financial Protection Bureau in stating that such language may “compound” consumer confusion, but the judge noted that neither the CFPB nor the Federal Trade Commission were granted ruelmaking powers under the FDCPA “through the filing and settling of lawsuits against debt collectors.”
