The Seventh Circuit has raised the bar yet again for any debt collector trying to collect a debt that may be time-barred. 
In Pantoja v. Portfolio Recovery Associates, LLC, the Seventh Circuit Court of Appeals issued a loud warning to debt collectors attempting to collect debts that are outside the applicable statute of limitation period.  The latest case extends a recent trend that restricts collectors from trying to collect older debts.  After Pantoja, the challenge has become even greater.  According to the Court, debt collectors cannot send any collection letter on a time-barred debt without clearly and conspicuously disclosing to the debtor that the collector lacks the legal right to sue and that any payment by the debtor may refresh the statute of limitations.
In Pantoja, plaintiff received a collection letter regarding a Capital One credit card.  That letter also stated that "because of the age of your debt, we will not sue you for it and we will not report it to any credit reporting agency."  The district court granted summary judgment to plaintiff on his FDCPA claim, concluding that it was deceptive and misleading for the debt collector to indicate that it was choosing not to bring legal action, as opposed to revealing that it no longer had the right to bring suit because the statute of limitations had expired. 
The Seventh Circuit affirmed, finding that the letter violated the FDCPA because "(a) it did not tell the consumer that the defendant could not sue on this time-barred debt and (b) it did not tell the consumer that if he made, or even just agreed to make, a partial payment on the debt, he could restart the clock on the long-expired statute of limitations, in effect bringing a long-dead debt back to life." 
The Court went further in questioning the motivation behind the time-barred disclosure that was given: "The carefully crafted language, chosen to obscure from the debtor that the law prohibits the collector form suing to collect the debt or even from threatening to do so, is the sort of misleading tactic the FDCPA prohibits.  The only reason to use such carefully ambiguous language is the expectation that at least some unsophisticated debtors will misunderstand and will choose to pay on the ancient, time-barred debts because they fear the consequences of not doing so."
Making the result all the more troubling, and compliance that much more unsettled, the Court declined to provide any type of "safe harbor" language that the Seventh Circuit has offered in other FDCPA cases.  At best, the Court gave a hint to what it felt is now required in any disclosure: "the language would need to be clear, accessible, and unambiguous to the unsophisticated consumer." In the Court's view, any language short of an explicit disclosure that the collector cannot sue and that the debtor may waive legal protections by making a payment "purposefully obscures" the nature of the debt in violation of the FDCPA.
The lesson to be gleaned from Pantoja is that a debt collector is required to offer unequivocal legal advice that a limitation period has expired whenever collecting older debt.  That disclosure requires, at a minimum, an unambiguous disclosure that the debt collector cannot (as opposed to will not) bring suit on the debt and that any payment may restart the statute of limitations.
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