Understand the complexities and nuances of the Bankruptcy Code to better advise clients and prepare for court.
By Stephanie Cumings
Jan. 14 — A debt collector can't blame its attempts to collect a discharged debt on a typo in the debtor's address (Buckley v. Afni, Inc., 2016 BL 2288, S.D. Ind., No. 1:14-cv-01275-TAB-WTL, 1/6/16).
Judge Tim A. Baker agreed that the creditor should have realized the debt had been discharged, but the attempts to collect didn't rise to the level of harassment and abuse like the debtor claimed.
Kristie Buckley received a discharge in bankruptcy, which included the discharge of three debts that were being collected by Afni, Inc., a collections agency. Afni updated its system to reflect that Buckley's AT&T and T-Mobile debts had been discharged, but neglected to do the same for the DIRECTV debt.
Five months after the discharge, Afni obtained Buckley's credit report in order to formulate a strategy to collect the DIRECTV debt and eventually sent Buckley a letter attempting to collect part of the debt in lieu of the full amount.
Buckley responded by suing Afni for various violations of the Fair Credit Reporting Act and the Fair Debt Collection Practices Act and both parties moved for summary judgment.
Under the FCRA, creditors can't access a creditor report without some permissible purpose, and the court agreed with the debtor that Afni lacked such a purpose in this case. Afni argued that its confusion about the discharge was justified because Buckley's address on the DIRECTV account was slightly different than on the bankruptcy notice, but the court said this was “not enough to suggest Afni had reason to believe the DIRECTV debt was still valid.”
The court noted that the bankruptcy notice used other identifiers, like Buckley's name and Social Security number, that Afni could have used to identify her account.
“Therefore, Afni had enough information to connect Buckley's DIRECTV account with her bankruptcy, as it did with her other accounts,” the court said. “Not doing so was simply Afni's internal failure.” The court therefore granted summary judgment in favor of Buckley on the FCRA claim.
However, the court didn't agree that Afni's debt collection attempt rose to the level of harassment in violation of the FDCPA. Afni's letter stated in relevant part: “We are making another attempt to contact you regarding your overdue account. In an effort to resolve this matter we will accept $100. Once paid, our records will reflect the status of your account with Afni, Inc. as closed as [sic] settled.”
The court said this language “was appropriately worded, even though the debt it sought to collect was not valid,” and didn't “appear intended to harass, oppress, or abuse.”
Similarly, the court found that Afni hadn't used “unfair or unconscionable means” in its debt collection efforts.
However, the court found that Afni did violate the FDCPA by contacting Buckley directly even though it had been informed she was represented by an attorney. The court also found that it was unclear at this point whether or not Buckley was actually misled by the letter into believing she still owed the debt, and that question was better suited for trial than a summary judgment motion.
Finally, the court wasn't persuaded that Afni's collection attempts were simply a “bona fide error.” This would require showing that the mistake happened despite the creditor's procedures that are “reasonably adapted to avoid such error.”
The court said that Afni “fail[ed] to identify exactly what went wrong with Buckley's DIRECTV account and it fail[ed] to identify how its policies were aimed at preventing this error from happening.” Therefore, bona fide error was not a viable excuse for any of the claims against Afni.
Michael Anthony Eades and John Thomas Steinkamp of John T. Steinkamp and Associates, Indianapolis, represented the debtor.
Afni was represented by Justin M. Penn of Hinshaw & Culbertson, LLP, Chicago.
To contact the reporter on this story: Stephanie Cumings in Washington at email@example.com
To contact the editor responsible for this story: Jay Horowitz at firstname.lastname@example.org
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)