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Settlement Offer May Violate FDCPA

Settlement offer on a time-barred debt due to statute of limitation – It survives a motion to dismiss according to the Sixth Circuit. In Buchanan v. Northland Group, Inc., No. 13-2523 (6th Cir. Jan. 13, 2015), the plaintiff received an offer to settle a debt from the defendant. However, that debt exceeded the six-year statute of limitations period in the state of Michigan where the debt arose. Thus, the defendant could not have taken legal action to recover the debt from the plaintiff. The plaintiff then sued the defendant under the FDCPA. The district court granted the defendant’s motion to dismiss. The Sixth Circuit in reversing the district court’s decision held that the term “settlement” is closely analogous to a legal proceeding and this could be misleading to the “least sophisticated” consumer. Very interesting. Stay tuned.