Court rules that collection agency cannot require that debtors must dispute a claim in writing.

Edrie Pfeiffer
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Edrie Pfeiffer, Bankruptcy & Divorce Attorney

You receive a notice in the mail that XYZ company is now collecting on a debt that you owe to ABC company. You are unsure of the validity of the debt and call XYZ company for more information. You tell them that you do not believe that you owe the debt and to provide you with more information on it. They never do so and continue to try to collect on the debt. This was the situation facing a couple in North Carolina recently.

The Clarks incurred debts at a health care facility. The health care facility after some time, like many creditors, referred the debts to a third-party collector, Absolute Collection Service (“ACS”). ACS sent collection notices to the Clarks. The collection notices only allowed the Clarks to dispute the validity of the debts in writing.

The Clarks sued ACS on behalf of themselves and all others similarly situated, for ACS’s illegal attempt to collect a debt, since the collection notice ACS sent was illegal under the Fair Debt Collection Practices Act (“FDCPA”). Initially, the District Court dismissed the Clarks’ claim relying on ACS’s argument that the FDCPA expressly contained a requirement that allowed for disputes to be in writing, but did not expressly allow an oral dispute.

The case was appealed to the Fourth Circuit. This was the first case of its kind in the Fourth Circuit. However, other Circuits had decided on this issue. The Third Circuit held that the FDCPA only allowed disputes to be submitted in writing, while the Second and Ninth Circuits held that oral disputes were inherently drafted into the statute. Ultimately, the Fourth Circuit agreed with the Second and Ninth Circuits when it found that oral disputes were allowed by the statute.

If you are being harassed by collection agencies and want to how to stop them completely, contact Hampton Roads Legal Services at (757) 276-6555 to schedule an appointment and find out how bankruptcy can eliminate calls and letters from collection agencies.