In a recent decision, the U.S. District Court for the District of Maryland (J. Motz), allowed a Fair Debt Collection Practices Act (FDCPA) claim to proceed against a law firm that attempted to collect a debt after the debt had been discharged in bankruptcy. The case is Gamble v. Fradkin & Weber, P.A., No. JFM-11-1779, 2012 WL 115423 (D. Md. Jan. 13, 2012).
The plaintiff brought the FDCPA claim under 15 U.S.C. § 1692e. Among other things, § 1692e prohibits the “false representation of … the character, amount, or legal status of any debt”, and “the use of any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer.”
The court began its analysis by recognizing that law firms engaging in collection efforts on a consumer debt are “debt collectors” and may be sued under the FDCPA, even if their sole role is limited to litigation. Id. at *3 (citing Sayyed v. Wolpoff & Abramson, 485 F.3d 226, 229 (4th Cir. 2007)).
The court then recognized that there is no knowledge requirement under the FDCPA. The law firm argued that it did not know the debt had been discharged in bankruptcy. The court rejected the argument, ruling that the FDCPA applies “even when a false representation was unintentional.” Id.
Importantly, the cour then rejected the law firm’s argument that the bankruptcy code prevented the FDCPA claim. The law firm argued that the bankruptcy code provided the exclusive remedy for contacting a debtor in connection with a discharged debt.
In considering the argument, the court recognized that, although some federal circuits have accepted the argument, others have not. Id. at *4. The court also recognized that the issue has not yet been addressed by the U.S. Court of Appeals for the Fourth Circuit. Id. Ultimately, the court decided that the FDCPA claim was not precluded by the bankruptcy code because the law firm’s conduct occurred after the discharge, and not while the bankruptcy was pending.
In sum, the decision is a win for consumers. In an age where many businesses seem to feel they are above the law, and may violate the law at will, consumers are in more need than ever for courts to issue unbiased, honest decisions that correctly interpret the law and protect consumer rights.