Position Paper of the Commercial Law League of America Supporting a Litigation Exception to the Fair Debt Collection Practices Act February 3, 1999 Introduction The Commercial Law League of America ("CLLA"), founded in 1895, is the nationâ??s oldest organization of attorneys and other experts in credit and finance actively engaged in the fields of commercial law, bankruptcy and reorganization. Its membership exceeds 4,600 individuals. The CLLA has long been associated with the representation of creditor interests, while at the same time seeking fair, equitable and efficient treatment of all parties in interest. The CLLA has testified on numerous occasions before Congress as experts in fields related to creditor interests. The Litigation Exception to the Fair Debt Collection Practices Act The CLLA supports and strongly urges the enactment of a litigation exception to the Fair Debt Collection Practices Act ("FDCPA"). In its present form, the FDCPA places an unreasonable risk of liability on attorneys, produces absurd results, and imperils Constitutional due process rights. A litigation exception would serve to clarify that, in litigation, attorneys are not debt collectors, but advocates representing the legal interests of their clients. Of equal importance, a litigation exception does not interfere with the protections the FDCPA affords consumers. Attorneys were brought within the ambit of the FDCPA to close a loophole. Congress intended that attorneys engaging in debt collection activity substantially similar to that performed by non-attorney collection agencies should not escape FDCPA liability solely by virtue of possessing a law degree. Subsequent interpretation of the amendment produced a far broader result â?? activities in which a law degree is required were construed as falling within the provisions of the FDCPA. Thus, the amendment intended only to eliminate favorable treatment of attorneys created unique risk of liability applicable to attorneys alone. In its present form, the FDCPA places unreasonable risk of liability on attorneys. Once litigation is commenced, the conduct of an attorney representing the creditor is sufficiently regulated by applicable law, court rules and standards of ethical conduct. At the same time, however, the FDCPA imposes its own requirements, which often cannot be reconciled with those governing litigation. Compliance with the FDCPA compromises the attorneyâ??s ability to zealously advocate for the client and to diligently prosecute the case. Failure to comply, on the other hand, could give rise to the damages specifically provided for in the FDCPA itself. The unintended and sometimes absurd results have been noted by many courts dealing with this irreconcilable conflict. Initiating a lawsuit after the consumer request that all communications cease may violate the FDCPA. The filing of documents with the court or questioning of witnesses could be construed as impermissible communications with third parties. Far worse, by preventing attorneys from engaging in the normal practice of law, the FDCPA could impede a creditorâ??s access to the courts, which calls into question the constitutionality of the FDCPA as applied to litigation. Because many controls and restraints already exist to regulate the conduct of attorneys, a litigation exception would not dilute the protections of the FDCPA. Such an exception would, however, bring about a sensible and much needed change in current practice. Attorneys engaging in debt collection activities that do not constitute the practice of law would remain bound by the provisions of the FDCPA, as Congress originally intended. The litigation exception is necessary to ensure that once litigation begins, attorneys may uphold their duty to their clients without running afoul of a statute by which they were never intended to be bound. Conclusion The CLLA welcomes the opportunity to discuss and analyze its position on the litigation exception and to fully participate in any proposed reform. I seen this while doing a search for attorneys who practice FDCPA suits for consumers. Don't know why I ended up seeing this but I am glad I did because it has some interesting perspectives from a law firms point of view regarding debt collection. SnakeMan
Yes, it is interesting. And I can actually see that there should be a difference in whether a lawyer is PRACTICING LAW or DOING COLLECTIONS. On the surface, at least, this makes sense. But knowing lawyers, they will find a way to bend it so all lawyers are exempt, I bet.
the common sense answer would be they are practicing collections until a summons is issued, then they are practicing law.
Wrong. They are still bound by FDCPA when collecting a debt even if it's in a court. That's the point. SnakeMan
They're trying again. September 15, 2003 FDCPA bill introduced. On September 10th, Rep. Garrett (R-NJ) introduced HR 3066, a bill to amend the Fair Debt Collection Practices Act. It is co-sponsored by, among others, Rep. Andrews (D-NJ) and although similar to the bill he had introduced in previous Congresses, it varies in some significant ways. The bill does contain a provision creating an "attorney practicing as an attorney" exemption as well as language confirming the right to collect during the first 30 days (both being issues supported by the League). The bill does not address a consumers right retain counsel and have fees paid nor limit a consumer's statutory damages amount. The text of the bill can be viewed here.
Here's the proposed bill. Clarifications to the Fair Debt Collection Practices Act (Introduced in House) HR 3066 IH 108th CONGRESS 1st Session H. R. 3066 To amend the Fair Debt Collection Practices Act to make certain technical corrections, and for other purposes. IN THE HOUSE OF REPRESENTATIVES September 10, 2003 Mr. GARRETT of New Jersey (for himself, Mr. ANDREWS, Mrs. KELLY, Mr. MURPHY, Mr. BEREUTER, Mr. BOYD, Mr. RAMSTAD, Mr. MOORE, Mr. CARTER, Mr. MCCOTTER, Mr. FEENEY, Ms. GINNY BROWN-WAITE of Florida, Mr. HENSARLING, and Ms. HART) introduced the following bill; which was referred to the Committee on Financial Services -------------------------------------------------------------------------------- A BILL To amend the Fair Debt Collection Practices Act to make certain technical corrections, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the `Clarifications to the Fair Debt Collection Practices Act'. SEC. 2. ELIMINATING REQUIREMENT FOR THE `VALIDATION NOTICE' IN FORMAL PLEADINGS. Section 809 of the Fair Debt Collection Practices Act (15 U.S.C. 1692g) is amended by adding at the end the following new subsection: `(d) FORMAL PLEADINGS EXCLUDED- Communications which are formal pleadings in a civil action shall not be considered communications for purposes of this title.' SEC. 3. CODIFICATION OF THE CONSUMER VALIDATION NOTICE. Section 809 of the Fair Debt Collection Practices Act (15 U.S.C. 1692g) is amended-- (1) in the portion of subsection (a) that precedes paragraph (1), by inserting `a written notice described in subsection (e) or' before `a written notice'; and (2) by inserting after subsection (d) (as added by section 2 of this Act) the following new subsection: `(e) ALTERNATIVE VERSION OF NOTICE- A notice is described in this subsection for purposes of subsection (a) if the notice contains-- `(1) the amount of the debt; `(2) the name of the creditor to whom the debt is owed; and `(3) a statement containing the following: `Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume this debt is valid. If you notify this office in writing within 30 days from receiving this notice that you dispute the validity of this debt or any portion thereof, this office will obtain verification of the debt or obtain a copy of a judgment and provide you with a copy of such judgment or verification. If you request of this office in writing within 30 days after receiving this notice this office will provide you with the name and address of the original creditor, if different from the current creditor.'. SEC. 4. CLARIFYING RIGHT TO COLLECT WITHIN THE FIRST 30 DAYS. Section 809(b) of the Fair Debt Collection Practices Act (15 U.S.C. 1692g(b)) is amended by striking `If the consumer' and inserting `Collection activities and communications may continue during the thirty-day period. However, if the consumer'. SEC. 5. CLARIFYING THE REFERENCE TO `ATTORNEY' AND `REASONABLE TIME'. The Fair Debt Collection Practices Act is amended-- (1) in section 804(6) (15 U.S.C. 1692b(6))-- (A) by striking `an attorney' and inserting `an attorney at law'; and (B) by striking `a reasonable period of time' and inserting `30 days'; and (2) in section 805(a)(2) (15 U.S.C. 1692c(a)(2))-- (A) by striking `an attorney' and inserting `an attorney at law'; and (B) by striking `a reasonable period of time' and inserting `30 days'. SEC. 6. CEASING COMMUNICATIONS. Subsection (c) of section 805 of the Fair Debt Collection Practices Act (15 U.S.C. 1692c(c)) is amended to read as follows: `(c) CEASING COMMUNICATION- `(1) IN GENERAL- If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt, except for one additional communication which may be made by the debt collector for any of the following purposes (however many may apply): `(A) To advise the consumer that the debt collector's further efforts are being terminated. `(B) To notify the consumer that the debt collector or creditor may invoke specified remedies which are ordinarily invoked by such debt collector or creditor. `(C) Where applicable, to notify the consumer that the debt collector or creditor intends to invoke a specified remedy. `(2) EFFECTIVE DATE OF NOTICE- If a notice referred to in paragraph (1) from a consumer is made by mail, notification shall be complete upon receipt.'. SEC. 7. THE `BRADY AMENDMENT'. Section 807(8) of the Fair Debt Collection Practices Act (15 U.S.C. Section 1692e(8)) is amended by striking `disputed debt' and inserting `debt which has been disputed by the consumer in writing'. SEC. 8. VALIDATION OF DEBTS. Section 809(a)(3) of the Fair Debt Collection Practices Act (15 U.S.C. 1692g(a)(3)) is amended by inserting `in writing,' after `any portion thereof,'. -------------------------------------------------------------------------------- THIS SEARCH THIS DOCUMENT GO TO Next Hit Forward New Bills Search Prev Hit Back HomePage Hit List Best Sections Help Contents Display --------------------------------------------------------------------------------
There is already a provision which says that an attorney which does nothing EXCEPT filing a summons, or trying a case against a consumer on behalf of their client is exempt from the FDCPA. IT IS ONLY when the lawyer sends letters to collect that they cross over from being a lawyer, to being a debt collector. The FTC even extended that protection so that if the lawyer sends an answer to the consumers response to the summons, or other legal activity, that they are still exempt from the FDCPA. (6) The term "debt collector" means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 808(6), such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include -- (A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor; (B) any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts; (C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties; --> (D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt; (E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquidation of their debts by receiving payments from such consumers and distributing such amounts to creditors; and (F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity (i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a debt which was originated by such person; (iii) concerns a debt which was not in default at the time it was obtained by such person; or (iv) concerns a debt obtained by such person as a secured party in a commercial credit transaction involving the creditor. From the commentary 1. Coverage (Sections 803(2, 5, 6), 811) Attorneys or law firms that engage in traditional debt collection activities (sending dunning letters, making collection calls to consumers) are covered by the FDCPA, but those whose practice is limited to legal activities are not covered.(6) Similarly, filing or service of a complaint or other legal paper (or transmission of a notice that is a legal prerequisite to enforcement of a debt) is not a "communication" covered by the FDCPA, but traditional collection efforts are covered.(7) ... Section 803(6) defines "debt collector" as a party "who uses any instrumentality of interstate commerce or the mails in . . . collection of . . . debts owed . . . another." 2. Exclusions. The term does not include: * Any person who collects debts (or attempts to do so) only in isolated instances, because the definition includes only those who "regularly" collect debts. * A credit card issuer that collects its cardholder's account, even when the account is based upon purchases from participating merchants, because the issuer is collecting its own debts, not those "owed or due another." * An attorney whose practice is limited to legal activities (e.g., the filing and prosecution of lawsuits to reduce debts to judgment).
LOL, here here!! I love a good debate! This actually could be very helpful to those of us who are at risk of going to court to defend a suit for a debt. If an attorney has assumed a debt from a CA and is in court to get a judgment, this type of thinking makes me believe that it would be easy for us to cite such discrepancies and basically have our way with whomever we choose. WE ROCK! SnakeMan
