In a surprising and new decision from the federal court in the Central District of Illinois, a judge has re-written the FDCPA to include a requirement that collection letters pertaining to out of stat debts must advise consumers that the debt is unenforceable.

Ruling in favor of the plaintiff representing a proposed class, the court in McRill v. Nationwide Credit, Inc. rejected long standing precedent that held that the collection of time-barred debt is not prohibited by the FDCPA, unless the collector explicitly or implicitly threatened litigation.

In McRill, the court analyzed a letter the defendant sent to the plaintiff.  The letter sought to collect a credit card debt on which the Illinois statute of limitations had run.  There was no dispute that the letter did not threaten litigation and offered the plaintiff various settlement options.  Nevertheless, the plaintiff argued that the letter was deceptive under the FDCPA and created the appearance that the debt was legally enforceable simply because the letter failed to disclose that the debt was time-barred.

The district court acknowledged that other courts that have considered this precise issue have found in favor of the debt collector.  The judge rejected the other rulings.  The court stated that "even absent a threat of litigation, a collection letter that fails to disclose that a debt is time-barred, or the dates of the transactions giving rise to the debt (which would, at least, give the consumer some idea of how old the debt was), would deceive at least a significant fraction of the population as to the character and legal status of the debt by creating the impression that the debt collector could sue to collect."

Our concern:  How long will it be before this ruling is extended to all verbal communications regarding an out of stat debt?

There is other litigation in this same court (different judge) that involves the same plaintiff's attorneys, but not the same debt collector.  Any questions or concerns, please contact us.

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