In a case that was defended by Cooper Walker and the team at Frost Echols, a District Court judge in New York has granted a defendant’s motion for judgment on the pleadings after it was sued for violating the Fair Debt Collection Practices Act because it did not state in a collection letter that interest was accruing on the unpaid balance and that a settlement offer without an expiration date was an “collection tactic” meant to “coerce” the plaintiff into paying the debt.
A copy of the ruling in the case of Felerbaum v. Sequium Asset Solutions and LVNV Funding can be accessed by clicking here.
The plaintiff received a collection letter, seeking to recover a debt of $27,212.94. The letter offered to settle the debt for 65% of the total that was due. The letter did not state a date by which the plaintiff had to accept the offer or a date on which the offer would expire.
The plaintiff filed suit, alleging the actual amount due was $49,051.33 because interest was accruing on the balance, and that the defendant would not have accepted the settlement amount had the plaintiff attempted to pay it.
The question, then, before Judge Nelson S. Roman of the District Court for the Southern District of New York, was whether a collector violates the FDCPA when it fails to state the interest clock is or is not running when offering to settle a debt. Using the Second Circuit ruling in Cortez v. Forster & Garbus, Judge Roman determined that a settlement offer does not have to enumerate anything about post-deadline interest and fees as long as the offer “clearly and accurately informs a debtor that payment of a specified sum by a specified date will satisfy the debt.”
“Put differently,” Judge Roman wrote, “so long as the offer has not lapsed and a debtor is entitled to pay a specified sum to satisfy a debt, a debt collector is not bound to ‘anticipate every potential collateral consequence that could arise in connection with the payment or nonpayment of a debt.’ “
