Wednesday, April 13, 2011

debt collection - time-barred debt

Huertas v. Galaxy Asset Management, Inc. - 3d Cir. - April 11, 2011 In a case dependent partly on N.J. law, the court held that an attempt to a debt time-barred by the statute of limitations does not violation the Fair Debt Collection Practices Act, where the collection letter did not threaten litigation. The court noted that -- - Under NJ law, a debt obligation is not extinguished by the expiration of the statute of limitations, even though the debt is ultimately unenforceable in a court of law. This is also apparently the rule in Pennsylvania. See Cohen v. Keller, 90 A. 463 (Pa. 1914). - the majority of courts has held that when the expiration of the statute of limitations does not invalidate a debt, but merely renders it unenforceable, the FDCPA permits a debt collector to seek voluntary repayment of the time-barred debt so long as the debt collector does not initiate or threaten legal action in connection with its debt collection efforts (listing cases on both sides of the issue). - despite the above, a collection letter that threatens litigation may violate the FDCPA. The letter in this case did not, even under the "least sophisticated debtor" standard.