Supreme Court Rules on Definition of Debt Collector


The Supreme Court recently handed down an important decision in the case of Henson v. Santander Consumer USA. The decision ultimately is not very consumer friendly but the ruling was not unexpected and fortunately, Loan Lawyers was ahead of the curve on the issue. The case considered a member of the public who sued a debt purchaser over alleged misconduct relating to attempts by a debt collector to collect upon a debt which they had purchased. The FDCPA defines a debt collector as someone who attempts to collect debts on behalf of another person who owns the debt OR as someone who is in the business of collecting debts.

Is a company or person who tries to collect on a debt that they bought from someone else a debt collector?

Different courts in the United States have ruled differently on the issue and some Courts in South Florida have ruled on this matter in a consumer-friendly way but not necessarily in the correct way. In a rare unanimous decision, the Supreme Court ultimately ruled that a company which purchases a debt is not a debt collector simply because the debt was originally owed to someone else. This might at first glance seem problematic for our office given the fact we litigate quite a few FDCPA cases but that is not accurate. Even if some courts in South Florida have ruled in a way convenient for consumer-litigation attorneys that did not mean they were right and our office has been waiting for a higher court to clarify the issue. Our consumer protection department has rarely if ever made the argument that a company who owns a debt is a debt collector because the debt was originally owed to someone else. If anything this ruling is beneficial for our office and for our clients because it helps to establish our credibility with local courts. If our analysis on this legal issue was ahead of the curve and ultimately proven to be correct by the United States Supreme Court, arguments we may bring on other matters will have greater weight. Ultimately this ruling does not pose a serious problem for FDCPA litigation because even if a company like Santander is not a debt collector if it buys a debt, it can still be a debt collector because it is in a business the purpose of which is the collection of debts.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, contact us to see how we may be able to help you.

This document has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please consult your attorney in connection with any legal issues related to the matters discussed in this article as the applicability of state, local and federal laws may vary.