On May 18, a federal judge in Missouri denied cross motions for summary judgment on the issue of whether a letter that did not inform a debtor that interest was, in fact, accruing violated the FDCPA.

In Mygatt v. Medicredit, plaintiff Timberly Mygatt incurred medical debt that was being collected by Medicredit.  In order to collect on this debt, Medicredit sent two letters to Mygatt.  The first letter referenced a balance of $300.23, but it did not indicate whether the balance would increase.  The second letter referenced a balance of $308.28, again, without referencing whether the balance would increase.  As of the date of the second letter, Medicredit began assessing 9% interest on Mygatt’s debt.  When Mygatt questioned the increase, Medicredit informed her that interest accrued once the claim was placed with Medicredit for collections and not with the original creditor.

Mygatt subsequently filed a Chapter 7 bankruptcy and listed the increased balance in her schedules.  She then filed suit against Medicredit for violations of the FDCPA.

In filing her summary judgment motion, Mygatt asserted the FDCPA required debt collectors to disclose that a balance may increase due to interest and fees.  In doing so, she relied heavily on Avila v. Riexinger & Associates, LLC, 817 F 3d 72, 76 (2d Cir. 2016).  In response, Medicredit argued the FDCPA did not, in fact, require a collector to disclose whether interest was accruing.

The Court denied Mygatt’s summary judgment motion, noting that the authority relied upon by Mygatt were denials of motions to dismiss and had little value in determining an FDCPA violation as a matter of law.  The Court also noted that district courts were reluctant to make a decision on this issue because of inconsistencies within the districts.  Rather, the courts review these matters on a case by case basis and refuse to resolve them at summary judgment.

The Court also remarked that the Eighth Circuit had not decided whether collectors must disclose that interest will accrue in collection letters.  Therefore, the Court was unwilling to decide the issue as a matter of law.

In Medicredit’s summary judgment motion, it argued it was not liable under the FDCPA because Mygatt admitted that interest accrued on her debt because she used the higher balance when filing her Chapter 7 bankruptcy.  The Court was not convinced that Mygatt’s reference in her bankruptcy filings was an admission that interest was accruing on her debt. 

In denying Medicredit’s motion, the Court held that whether there is an FDCPA violation was largely an issue of fact that was generally not amenable to summary judgment.  The Court did note that a reasonable person could find the balance provided to Mygatt, with no indication that interest was accruing, was confusing and that it would defer to the trier of fact to determine if there was an FDCPA violation.

This Court essentially ruled that current balance cases are so fact-specific that resolution is unlikely by dispositive motion.  The facts in this particular case also add an additional twist that interest was in fact accruing as opposed to other cases where interest was either not accruing or was waived.

We will continue to monitor and report on these cases as the law develops.