A District Court judge in Pennsylvania has granted a defendant’s motion for judgment on the pleadings in a Fair Debt Collection Practices Act class-action, ruling the defendants did not violate a state law regarding the interest rate it was charging and were not required to itemize the debt when filing a proof of claim during the plaintiffs’ bankruptcy proceedings.
The Background: The plaintiffs filed for bankruptcy protection in February 2020. The defendant filed a proof of claim, indicating the plaintiffs owed $5,081.95, but did not indicate whether that included any interest or other fees. The plaintiffs objected to the proof of claim, leading the defendants to file an amended POC, which this time itemized the debt and indicated that the interest rate being charged was 19.99%.
- After their bankruptcy proceedings concluded, the plaintiffs filed suit, accusing the defendants of violating the FDCPA by attempting to collect interest at a rate that the defendant was not licensed to collect and for failing to itemize the debt in the proof of claim.
The Ruling: The state law in question is Pennsylvania’s Consumer Discount Company Act (CDCA), which requires lenders be licensed in the state if they are going to charge an interest rate in excess of 6%. But, as numerous cases in Pennsylvania have decided — some very recently — collectors and debt buyers are not lenders and thus not subject to the CDCA, ruled Judge W. Scott Hardy of the District Court for the Western District of Pennsylvania.
- On the claims that the defendants did not itemize the debts, the FDCPA doesn’t require them to do that, Judge Hardy noted, referencing rulings from other District Court judges within the Third Circuit and rulings from two other Circuit Courts of Appeal. The plaintiffs are trying to use the Bankruptcy Code to create a cause of action under the FDCPA that would otherwise not exist, the judge ruled.
