Law firm failed to 'inform the debtor' in lawsuit under Fair Debt Collection Practices Act.

• Date: 21 January 2004
• Author: Ziemer, David

Byline: David Ziemer

A law firm's filing a summons and complaint on behalf of a creditor after a debtor missed payment on an installment contract was an "initial communication" that triggered obligations to inform the debtor of his validation rights under the FDCPA, a divided Seventh Circuit panel held on Jan. 13.

In 1998, Frank Thomas purchased a Chevrolet Blazer under an installment contract immediately assigned to GMAC. In 2000, he received a default letter from GMAC informing him that his payment on the vehicle was past due.

Two months later, GMAC, through its attorneys, Simpson & Cybak (Simpson), sued Thomas in Illinois state court to recover the vehicle. The complaint included a statement that, "[p]ursuant to the [FDCPA], you are advised that this law firm is a debt collector attempting to collect a debt, and any information obtained will be used for that purpose." The summons included similar language.

Thomas then brought suit in Illinois federal court against GMAC and Simpson under the Fair Debt Collection Practices Act (FDCPA), claiming that neither party sent him a debt validation notice advising him of his rights as a debtor, pursuant to 15 U.S.C. 1692g(a).

The district court granted both defendants' motions to dismiss, and Thomas appealed. The Seventh Circuit affirmed the dismissal of the suit against GMAC, but reversed as to Simpson, in a decision written by Judge Ann Claire Williams and joined by Judge Ilana D. Rovner. Judge Terence T. Evans dissented.

The Statute

Section 1692g(a) requires that, within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector must send the debtor a written validation notice containing certain information. The notice must inform the debtor of the amount of the debt, the name of the creditor, and that the debt will be assumed valid if the debtor does not dispute its validity...