Just when we thought the answer to the question “What is a Debt Collector” was answered! A Colorado man defaulted on a home loan in the aftermath of the 2008 financial crisis. The loan was transferred to Wells Fargo, and for six years, the bank attempted to foreclose on the home, but to no avail. Finally, in 2015, the loan was transferred to a law firm. It is alleged that the law firm has been using practices that do not align with the FDCPA – but should they? The case is now before the Supreme Court. Must the law firm adhere to the FDCPA?
- Because it is the man’s home at stake, and not his money, it seems to be a grey area
- The question of whether the law firm is a debt collector is one that could affect millions of Americans
- In 2016 alone, 200,000 homes were lost to foreclosure. Some states permit lenders to foreclose without going to court
- One side argues that this method of foreclosure is unfair to borrowers, and they are entitled to more protection – such as the FDCPA
- The law firm’s attorney argues that the FDCPA does not apply because the firm is not a “debt collector” by definition
- At least two federal appeals courts have reasoned that “debt is synonymous with money, not property
- So what is a debt collector? The Supreme Court is expected to offer a final decision in June.