New Jersey Federal Court Holds Dunning Letter on Time-Barred Debt Did Not Violate FDCPA

The United States District Court for the District of New Jersey recently dismissed a complaint alleging that a letter that sought to collect a time-barred debt violated the Fair Debt Collection Practices Act (“FDCPA”), holding that the letter never threatened litigation and that a settlement payment would not revive the statute of limitations.  See Tatis v. Allied Interstate, LLC, 2016 WL 5660431 (D.N.J. Sept. 29, 2016).  In the putative class action, the plaintiff received a letter from the defendant in which the defendant offered to “settle” a debt for a 90% discount.  The letter did not disclose that the debt was at least ten years old and that the defendant could not legally enforce the debt.  The plaintiff filed this action, alleging that the least sophisticated debtor would interpret the word “settle” to imply a threat of a legal action that cannot be taken, which would violate the FDCPA.  See 15 USC 1692e.  The plaintiff also claimed that the debt collector was obligated to disclose that a partial payment of a time-barred debt would restart the statute of limitations.  The defendant filed a motion to dismiss, arguing that a Third Circuit decision previously found that offers to settle time-barred debts do not violate the FDCPA.  See Huertas v. Galaxy Asset Mgmt., 641 F.3d 28 (3d Cir. 2011). 

In its opposition to the motion, the plaintiff noted that the Huertas decision pre-dated a 2013 Federal Trade Commission (“FTC”) report that stated that debt collectors should expressly state when an action to collect a debt is time-barred and/or when a partial payment would revive the statute of limitations.  The plaintiff also argued that both the Sixth and Seventh Circuits issued opinions consistent with the FTC’s recommendation in 2014 and 2015.  Finally, the plaintiff cited a 2016 District of New Jersey decision which likewise found a violation for sending a dunning letter on a time-barred debt.  See Filgueiras v. Portfolio Recovery Associates, LLC, 2016 WL 1626958 (D.N.J. Apr. 25, 2016).  Nonetheless, the court granted the motion to dismiss.  First, it stated that the FTC’s recommended disclosures would be a “better practice,” but that the defendant’s failure to adopt them was not a violation of the FDCPA.  Second, it held that a partial payment of a time-barred debt would not revive the statute of limitations under New Jersey law.  It therefore distinguished the other cases cited by the plaintiff because the Sixth and Seventh Circuits were applying state laws under which partial payments would restart the limitations period, and the court in Filguerias had acted under the incorrect assumption that the statute of limitations would have restarted. 

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