Bankruptcy Court Clarifies FDCPA Requirement
If you are thinking about filing for personal bankruptcy, you may already know that one of the major benefits of bankruptcy filing is the automatic stay. The automatic stay is an injunction that prevents creditors and debt collectors from taking any actions to collect on the debts you owe as soon as you file your petition. Accordingly, the automatic stay prevents creditors and debt collectors from initiating lawsuits against debtors, moving forward with lawsuits, initiating or moving forward with foreclosure proceedings, and even making calls or sending letters in an attempt to collect on debts owed. Yet what happens when a debt collector does not yet know that a debtor has filed for bankruptcy and takes action to collect on a debt? In other words, does the debtor have a claim against the debt collector for a violation of the U.S. Bankruptcy Code or a violation of the Fair Debt Collection Practices Act (FDCPA)?
The U.S. District Court for the District of Puerto Rico issued a decision on this question in the case Carrasquillo v. CICA Collection Agency, Inc. (2022), and the decision could impact future cases in Illinois and across the U.S. Our Oak Park bankruptcy attorneys can tell you more about the case.
Learning More About Carrasquillo
In Carrasquillo, the debtor filed for bankruptcy and later received a debt collection letter from the debt collector CICA Collection Agency. According to the debtor, CICA Collection Agency “knew or should have known that [the debtor] was under the protection of the Bankruptcy Code, as he had filed a voluntary bankruptcy petition on September 29, 2019, which listed the Claro debt,” which was the debt that CICA Collection Agency was attempting to collect. The debtor then argued that CICA Collection Agency had violated provisions of the FDCPA in making a collection effort following the debtor’s bankruptcy petition filing.
The court ultimately ruled against the debtor, clarifying that there was no FDCPA claim. The court was also asked to consider whether the FDCPA claims were precluded by the Bankruptcy Act and its provisions for the automatic stay, but the court ultimately determined that it did not need to address the question of preclusion since it found that the debtor’s “claims fail on the merits and must be dismissed.”
Reasoning in Carrasquillo
In considering the debtor’s claims, the court considered the debtor’s argument that CICA Collection Agency knew or should have known that he had filed for bankruptcy. The court relied on language from a Third Circuit Court of Appeals case, Hubbard v. National Bond and Collection Associates, Inc. (1991), which clarifies that the debt collector must know about the bankruptcy having and have the intent to violate: “A debt collector’s unknowing violation of an automatic stay does not transform an otherwise accurate collection letter into a ‘false representation’ within the meaning of the [FDCPA].”
The court emphasized that the debtor in Carrasquillo did not inform CICA Collection Agency that he had filed for bankruptcy, and the original creditor also did not inform CICA Collection Agency of the bankruptcy filing.
Contact an Oak Park Bankruptcy Attorney
The case suggests that a debt collector will not be found to have violated the FDCPA if it does not have clear information about a debtor’s bankruptcy filing. If you have questions or if you need assistance with your bankruptcy case, one of our experienced Oak Park bankruptcy lawyers can help. Contact the Emerson Law Firm today for more information.
See Related Blog Posts:
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The U.S. District Court for the District of Puerto Rico issued a decision on this question in the case Carrasquillo v. CICA Collection Agency, Inc. (2022), and the decision could impact future cases in Illinois and across the U.S. Our Oak Park bankruptcy attorneys can tell you more about the case.
Learning More About Carrasquillo
In Carrasquillo, the debtor filed for bankruptcy and later received a debt collection letter from the debt collector CICA Collection Agency. According to the debtor, CICA Collection Agency “knew or should have known that [the debtor] was under the protection of the Bankruptcy Code, as he had filed a voluntary bankruptcy petition on September 29, 2019, which listed the Claro debt,” which was the debt that CICA Collection Agency was attempting to collect. The debtor then argued that CICA Collection Agency had violated provisions of the FDCPA in making a collection effort following the debtor’s bankruptcy petition filing.
The court ultimately ruled against the debtor, clarifying that there was no FDCPA claim. The court was also asked to consider whether the FDCPA claims were precluded by the Bankruptcy Act and its provisions for the automatic stay, but the court ultimately determined that it did not need to address the question of preclusion since it found that the debtor’s “claims fail on the merits and must be dismissed.”
Reasoning in Carrasquillo
In considering the debtor’s claims, the court considered the debtor’s argument that CICA Collection Agency knew or should have known that he had filed for bankruptcy. The court relied on language from a Third Circuit Court of Appeals case, Hubbard v. National Bond and Collection Associates, Inc. (1991), which clarifies that the debt collector must know about the bankruptcy having and have the intent to violate: “A debt collector’s unknowing violation of an automatic stay does not transform an otherwise accurate collection letter into a ‘false representation’ within the meaning of the [FDCPA].”
The court emphasized that the debtor in Carrasquillo did not inform CICA Collection Agency that he had filed for bankruptcy, and the original creditor also did not inform CICA Collection Agency of the bankruptcy filing.
Contact an Oak Park Bankruptcy Attorney
The case suggests that a debt collector will not be found to have violated the FDCPA if it does not have clear information about a debtor’s bankruptcy filing. If you have questions or if you need assistance with your bankruptcy case, one of our experienced Oak Park bankruptcy lawyers can help. Contact the Emerson Law Firm today for more information.
See Related Blog Posts:
Top Things to Consider About Student Loans and Bankruptcy
New Information on Debts That Bankruptcy Cannot Discharge
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