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Baltimore Debt Collector Successfully Uses Mistake as A Legal Defense

Checkbook and statement.jpgSometimes, even debt collectors claim mistakes were made. In a recent court case, a Baltimore-based debt collector successfully used the "bona fide error" defense when it was sued for trying to collect a debt from a man who said he did not owe the money. The case arose from the efforts of Thieblot Ryan P.A., a Baltimore law firm, to collect a debt allegedly owed to Bank of America by Alexander Young in connection with his allegedly overdrawn checking account.

Young filed a lawsuit against the firm in the United States District Court for the District of Maryland under the Fair Debt Collection Practices Act (FDCPA) in June 2011. Young said the Baltimore-based debt collector falsely represented the amount, character and status of the alleged debt in a collection letter and the lawsuit it filed to collect the funds. Thieblot Ryan claimed that Young owed $3,936.48 in the papers it filed in the District Court of Maryland for Baltimore City.

The debt collector moved for summary judgment, arguing that Young's claims were barred by the FDCPA's statute of limitations, which provides that claims must be brought within one year of the date on which the violation occurs. Thieblot Ryan also claimed that it was protected by the 'bona fide error" defense under the FDCPA. A debt collector may not be held liable under the FDCPA if the debt collector shows that the violation was not intentional and resulted from a bona fide - genuine -- error.

Because the collection letter was postmarked June 1, 2010 and the lawsuit was filed on June 8, 2011, the court ruled the FDCA claim untimely to the extent that it was based on the undisclosed inclusion of prejudgment interest in the debt identified by the collection letter. Young had claimed that the debt collector's failure to disclose the inclusion of prejudgment interest violated the FDCPA. The calculation of the limitations period for a collection letter begins on the date that the collection letter is placed in the mail, not the date it is received by the consumer, the court said, relying on case decided in 2004. However, the court said, dismissal of the case based on the statute of limitations was not appropriate because the collection letter wasn't the only conduct about which Young had complained, the court noted.

Young also alleged violation of the FDCPA as a result of Thieblot Ryan's attempt to collect a debt that Young said he never owed. Young argued that by relying solely on the facts contained in the debt referral, the Baltimore debt collector had not demonstrated the existence of a reasonable error-avoiding procedure, similar to the blind reliance by a debt collector rejected in another court case.

The FDCPA does not require a debt collector to engage in an independent investigation of the debt referred for collection, according to a case decided in 2010. Thus, a misrepresentation made by a debt collector solely as a result of inaccurate information provided by its client would be a bona fide error under the FDCPA. However, a debt collector cannot invoke the "bona fide error" defense solely on the ground that the creditor's submission of information concerning the debt to be collected had, in the past, been accurate.

"In my view," the judge wrote, "defendant is entitled to protection based on the bona fide error defense." The court noted that the debt collector's procedures were consistent with those steps approved in cases where the claims appeared to be proper on their face. The court also noted that Young had not earlier disputed the validity or the amount of the asserted debt. The court also explained that the Baltimore law firm was never put on notice that it could not or should not rely on the creditor's calculations. No documentation in the file suggested that the claim was not valid nor did Young communicate to the Baltimore-based debt collector a dispute over the validity of the debt, the court pointed out. Thus, the law firm was not on notice of a possible mistake.

Young also argued that Thieblot Ryan was liable under the FDCPA for failing to dismiss the state complaint as soon as he took his case to federal court, because, by filing the lawsuit, he alerted Thieblot Ryan that he did not owe the debt. Apparently, the state court case was dismissed about four months after the federal suit was initiated. The court said that argument had been rejected in other cases.

As a result, the federal trial court dismissed the case.

The case is Alexander Young v. Thieblot, Ryan, P.A.

Belsky, Weinberg & Horowitz has represented consumers in bankruptcy and debt collection cases for many years. Call our bankruptcy attorneys at 410-234-0100 or email us for a free consultation and let us help you to resolve your credit and debt problems.

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