A District Court judge in Illinois has granted a plaintiff’s motion for summary judgment, ruling that a defendant needed to disclose in a collection letter that a partial payment or promise to pay would restart the statute of limitations under state law, even though it disclosed in the letter “we will not restart the statute of limitations on the debt if you make a payment.”
A copy of the ruling in the case of Perea v. Portfolio Recovery Associates can be accessed by clicking here.
The plaintiff received a collection letter seeking to collect on a debt where the statute of limitations had expired. The collection letter included the following disclosure:
The law limits how long you can be sued on a debt and how long a debt can appear on your credit report. Due to the age of this debt, we will not sue you for it or report payment or non-payment of it to a credit bureau. In addition, we will not restart the statute of limitations on the debt if you make a payment.
The plaintiff sued, alleging the disclosure violated Sections 1692e and 1692f of the Fair Debt Collection Practices Act by failing to disclose the effect of partial payment on the statute of limitations, that the statute of limitations on the debt had run, and that no information about the debt could be reported to credit bureaus.
Relying on the precedent set in Pantoja v. Portfolio Recovery Associates, Judge Mary Rowland of the District Court for the Northern District of Illinois, Eastern Division determined that promising not to restart the statute of limitations without disclosing that a partial payment or a promise to pay would restart the statute under Illinois law to be “misleading and deceptive.”
PRA argued that its policy of not restarting the statute of limitations meant there was no “pitfall” for the plaintiff to make a partial payment or promise to pay, which was compounded by disclosing that it would not sue the plaintiff.
But the plaintiff “is not expected to know PRA’s internal policies regarding suing on debts where the statute of limitations has run or rely on its promises to not pursue a debt collectible in court after the statute of limitations protection has been forfeited,” Judge Rowland wrote.
