Steve Harms

Sunday, June 3, 2012

Does "debt collector" include a creditor/loan servicer?

An account was assigned for collection to a loan servicing company.  The loan was not in default at the time of the assignment.  So, the servicing company can't be a "debt collector" under the Fair Debt Collection Practices Act, right?

Well, if the non-debt originating loan company takes the assignment believing the debt was actually delinquent, and starts an aggressive collection campaign against the debtor and her family, then the assignment is deemed to be that of a delinquent debt, and the loan servicing company is deemed to be a debt collector.  Also, since the FDCPA protects any person, the non-debtor family member (her husband) also gets to sue as a plaintiff!

Bridge v Ocwen was just heard in the 6th Circuit Court of Appeals in Ohio, so has national implications as a federal case.