News Briefs

Seventh Circuit gives "debt collectors" a "safe harbor" collection letter

By Thomas S. Hornig & Nancy B. Johnson

Since the 1995 Heintz v. Jenkins decision,¹ attorneys who collect consumer debts for clients have had to comply with the Fair Debt Collection Practices Act (FDCPA),² or be subject to actual damages, statutory damages (up to $1,000) and actual attorney fees.³ Due to the ever-changing interpretations of the FDCPA, complying with the Act can be difficult. However, the Seventh Circuit recently made our job a little easier.

In Bartlett v. Heibl⁴ Chief Judge Posner clarified the law for our circuit with respect to when a consumer collection suit may be commenced. The court also provided attorneys with a "safe harbor" collection letter. In Bartlett attorney Heibl sent the consumer, Bartlett, a collection letter that stated legal action would be commenced within one week if the consumer failed to make full payment or contact the creditor. The letter also contained the debt validation language required by the FDCPA,⁵ which included language to the effect that the consumer could dispute the debt within 30 days.⁶

The court held that the juxtaposition of the one-week period and the 30-day period in the same letter, without an explanation as to how the two time periods fit together, was confusing and thus violated the FDCPA.⁷ In an effort to provide debt collectors with guidance to avoid this confusion, the court incorporated into its decision a sample letter on the facts in Bartlett. The court referenced its letter, stating:

"We commend this redaction as a safe harbor for debt collectors who want to avoid liability for the kind of suit that Bartlett has brought and now won. ...We cannot require debt collectors to use 'our' form. But of course if they depart from it, they do so at their risk. Debt collectors who want to avoid suits by disgruntled debtors standing on their statutory rights would be well-advised to stick close to the form that we have drafted. It will be a safe haven for them, at least in the Seventh Circuit." (Emphasis added.)

The Bartlett court further clarified that suit may be brought prior to the expiration of the 30-day period specified in the debt validation language.

"The debt collector is perfectly free to sue within thirty days; he just must cease his efforts at collection during the interval between being asked for verification of the debt and mailing the verification to the debtor. 15 U.S.C. § 1692(b)."⁸

Collection attorneys wishing to bring suit prior to the expiration of the 30-day period specified now are explicitly allowed to do so in this circuit under Bartlett as long as they follow the form and substance of the court's "safe harbor" letter.

Endnotes

¹115 S. Ct. 1489, 131 L. Ed. 2d 395 (1995).

²15 U.S.C. §§ 1692g.

³15 U.S.C. §§ 1692k(a).

⁴1997 WL 616675 (7th Cir. 1997).

⁵15 U.S.C §§ 1692(g).

⁶Bartlett at 1-2.

⁷Id. at 4.

⁸Id.

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