The statute of limitations can be a tricky situation to navigate, if you are going to attempt to collect on a debt. But as long as you don’t make the individual believe that the debt is still legally enforceable, you’re on pretty solid ground. I bring this up as a preface to a Fair Debt Collection Practices Act case in which a District Court judge has granted a defendant’s motion to dismiss because it was sued for attempting to just collect on a debt for which the statute of limitations had expired.
A copy of the ruling in the case of Holmes v. New Rez et al. can be accessed by clicking here.
The plaintiff defaulted on his first and second mortgage back in 2008. Then, 13 years later, the plaintiff received a letter from the defendant identifying itself as the new servicer for the second mortgage and requesting payment for the balance. Among the disclosures made in the letter was one saying, “Please be advised that we cannot bring a legal action to collect this debt or threaten to do so in the state of New York because the statute of limitations has expired.”
The plaintiff claims the defendant then contacted him by phone and he informed the representative that the statute of limitations for collecting on the debt had expired, but the representative allegedly replied that the defendant was “going to collect on it anyway” and has continued to contact the plaintiff every two-to-three months since that conversation.
The plaintiff filed suit, alleging the letter violated Sections 1692e(2)(A), 1692f, and 1692g of the FDCPA because the letter falsely stated it could try to collect delinquent payments on the second mortgage even though the statute of limitations had expired.
Even a least sophisticated consumer would not have interpreted the letter as a legal action to collect on the debt, especially because it explicitly states that the defendant could not “bring a legal action to collect,” noted Judge Vincent L. Briccetti of the District Court for the Southern District of New York. Where the defendant could have gotten into trouble was if it had stated or led the plaintiff to believe that the debt was legally enforceable. Ultimately, the “plaintiff has not plausibly alleged NewRez threatened to take impermissible legal action or misstated the status of the second mortgage,” Judge Briccetti ruled in granting the motion to dismiss.
