New Jersey District Court Dismisses Plaintiff’s Class Action Complaint Without Prejudice, Finding Collection Letter on Time-Barred Debt Does Not Violate FDCPA

The United States District Court for the District of New Jersey recently granted defendant debt collector’s motion to dismiss a class action complaint alleging a violation of the Fair Debt Collection Practices Act (the “FDCPA”), 15 U.S.C. §1692 et seq.  Judah v. Total Card, Inc., 2017 WL 2345636 (D.N.J. 2017).  At issue in the case was a certain letter sent by defendant to plaintiff attempting to collect a debt (the “Collection Letter”).  The Collection Letter offered to settle plaintiff’s debt through a single payment or through six monthly payments but also stated, “[t]he law limits how long you can be sued on a debt. Because of the age of your debt, [the owner of the debt] will not sue you for it, and [the owner of the debt] will not report it to any credit agency.”  Plaintiff alleged that defendant’s Collection Letter was misleading because it failed to advise plaintiff that selecting either of the two options allegedly could create a new debt or contract and revive the statute of limitations.  Plaintiff also argued that defendant’s offers would cause the least sophisticated consumer to be confused about whether the debt was still legally enforceable and the legal consequences of entering into such a payment plan.  Specifically, although the Collection Letter stated that the owner of the debt would not sue plaintiff, defendant was not the owner of the debt, and the least sophisticated consumer might believe that defendant could still file a lawsuit.  Defendant filed the motion to dismiss in lieu of an answer.

In granting defendant’s motion to dismiss, the Court noted that when a debt collector seeks to collect an amount owed, there is nothing improper about making a settlement offer and there is no indication from the language of the Collection Letter that defendant intended to create a new contract if plaintiff agreed to any payment plan.  The Court considered the decision in Huertas v. Galaxy Asset Management, 641 F.3d 28 (3d Cir. 2011), where the Third Circuit Court of Appeals held that even if the statute of limitations expired, the FDCPA permits a debt collector to seek voluntary repayment of the time-barred debt so long as the debt collector does not initiate or threaten legal action in connection with its debt collection efforts.  The Court rejected plaintiff’s arguments that Huertas is inapplicable and noted that that case as not been overturned and as such, “this Court is bound to follow the holding in that case.”  The Court also held that a payment plan would not revive the time-barred debt because “[i]n New Jersey, . . . ‘the statute of limitations on a time-barred debt can only be revived if the debtor makes a written, unconditional promise to pay the full debt.’”  Finally, the Court then held that the Collection Letter is not potentially misleading to the unsophisticated consumer because, among other things, the Collection Letter does not threaten to initiate legal action, does not make any false representations about the character, amount, or legal status of the debt, and uses very similar disclosure language to previously approved language.  Therefore, there is no violation of Section 1692e.  The Court, however, allowed plaintiff an opportunity to file an amended complaint.

For a copy of the decision, please contact Michael O’Donnell at, Michael Crowley at or Clarissa Gomez at