Demands on Time-Barred Debt and the Fair Debt Collection Practices Act

This month’s blog will discuss demand letters on time-barred debt. This raises the issue of whether sending out a demand letter on a time-barred debt automatically constitutes a violation of the Fair Debt Collection Practices Act (“FDCPA”)?  Before discussing that issue, let’s look at what needs to be proved first and the standard by which the potential violations will be measured.

In order to prevail on an FDCPA claim, a person must establish that: (1) he was the object of collection activity arising from consumer debt; (2)  that the Defendant qualifies as a “debt collector” under the FDCPA; and (3) the Defendant engaged in an act or omission prohibited by the FDCPA. Valle v. First Nat’l Collection Bureau, Inc., 252 F.Supp.3d 1332 (S.D. Fla. 2017), citing, Dunham v. Lombardo, Davis & Goldman, 830 F.2d 1305, 1306-07 (S.D. Fla. 2011). Violations of the FDCPA are measured under the “least sophisticated consumer” standard. The least sophisticated consumer standard “looks to the tendency of the language to mislead the least sophisticated recipients of a debt collection letter.” Valle v. First Nat’l Collection Bureau, Inc., 252 F.Supp.3d 1332 (S.D. Fla. 2017), citing, LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1193-94 (11th Cir. 2010)The least sophisticated consumer is presumed to possess a rudimentary amount of information and a willingness to read a collection notice with some care and has an objective component to prevent liability for bizarre interpretations of collection notices. Id.

Many debt collectors do not accept time-barred debt at all for collection. Time-barred simply means that the time period for a filing a lawsuit has passed or expired. However, there are debt collectors who do try to collect on time-barred debt. If you are one of them, the Valle v. First Nat’l Collection Bureau, Inc., 252 F.Supp.3d 1332 (S.D. Fla. 2017) case is an excellent example of the how to shape a demand letter on time-barred debt to avoid a violation of the FDCPA.

In Valle, the demand letter stated that “The law limits how long you can be sued on a debt. Because of the age of your debt, LVNV Funding LLC will not sue you for it, and LVNV Funding LLC will not report it to any credit reporting agency.” Paraphrasing, the demand letter then warned that taking certain actions may “renew” the debt and start the time period for the filing of a lawsuit but that debtor should determine the effects of any actions you take with respect to this debt. Valle v. First Nat’l Collection Bureau, Inc., 252 F.Supp.3d 1332, 1339-40 (S.D. Fla. 2017).

In filing the lawsuit against the debt collector, the debtor’s position was that the debt collector used false, deceptive, or misleading language in connection with debt collection because the debt-collector did not state that the debt was a”absolutely time-barred” and failed to adequately disclose the impact that making a payment would revive the debt. Id. The Debtor cited a number of cases in support of its position. The Florida District Court in Valle disagreed and held that the demand letter must be read in the proper context.

Here, the debt collector informed the Debtor that there are legal limits to how long she could be sued on the debt and that she would not be sued. The court also rejected Debtor’s arguments that the debt collector wrongfully portrayed and misrepresented the effect of settling the debt because the settling for a portion of the debt may have different tax consequences because the debt collector stated that the debtor “should determine the effect of any actions you take with respect to this debt.” Id. As a result, there was no misleading or false representation.

I commend the Valle case to everyone. It is full of other relevant topics such as the benign language exception and provides a good road map on making a demand for time-barred debt where a debt collector clearly states that no lawsuit will be filled and acknowledges the time-barred nature of the debt. The opinions in this blog are solely the author’s and any comments, suggestions or replies can be sent to