On May 7, 2014, ACA International, the Association of Credit and Collection Professionals, submitted an amicus curiae brief in an important Fair Debt Collections Practices Act (FDCPA) dispute over settlement-letter language for time-barred debts. The plaintiff received a collection letter from the debt collector offering an opportunity to settle a debt after Michigan’s six-year limitations period for taking legal action had passed.

The trial court disagreed, holding that a debt collector that requests voluntary repayment of debt beyond the applicable limitations period does not violate the FDCPA, as long as there is no actual litigation or threat of future litigation, either implied or explicit, from the collector.  This holding follows similar rulings from the Third and Eighth Circuits and numerous federal district courts.  The Seventh Circuit, conversely, has held that offers to “settle” time-barred debts may falsely suggest that the debt is actually legally enforceable.

In its amicus brief, ACA urged the Sixth Circuit to uphold the district court’s decision and highlighted the adverse public-policy and due process consequences of a time-barred debt disclosure rule.  It also challenged the CFPB and FTC’s position – outlined in a parallel, joint amicus brief – that debt collectors should be required to disclose to consumers the legal enforceability of debts through lawsuits.

Furthermore, ACA noted that a special disclosure rule would impose burdens and risk of liability far beyond that contained in the FDCPA and would chill legitimate debt-resolution efforts by honest collectors.  The ACA requests that the Sixth Circuit not give excessive deference to the CFPB and FTC which, it argues, potentially could violate debt collectors’ due process rights.