11th Circuit Clarifies FDCPA/FCCPA Issues Re Periodic Mortgage Statements After Bankruptcy

In Helman v. Bank of America, 15-13672, 2017 WL 1350728 (11th Cir. April 12, 2017) the Eleventh Circuit Court of Appeal clarified important issues regarding the use of periodic mortgage statements after a bankruptcy discharge.  In Helman thee debtor sued Bank of America after he received a periodic mortgage statements required by the Truth in Lending Act for his mortgage which he had discharged in bankruptcy. The statements he received were qualified by Bank of America in important ways, including being labeled as “FOR INFORMATIONAL PURPOSES” and containing a disclosure that Bank of America’s records indicated the debt was discharged in bankruptcy and that therefore the debtor had no personal obligation to repay the debt.  Despite these disclosures, the debtor argued that periodic statement violated the Fair Debt Collection Practices Act (FDCPA) and the Florida Consumer Collection Practices Act (FCCPA) insofar as it allegedly purported to attempted to collect a debt when no legal right existed to do so, and/or was misleading to the least sophisticated consumer because it suggested personal liability.  The district court dismissed these claims and the Eleventh Circuit affirmed. The Eleventh Circuit found that the FDCPA did not apply to Bank of America with respect to the periodic statements because Bank of America was not a debt collector. Specifically the Eleventh Circuit found that the parties did not dispute that Bank of America originated the debt at issue, and therefore Bank of America was not acting as a debt collector but rather as the original creditor seeking to collect its own debt.  However, since original creditors are not except from the FCCPA, the Court required other grounds to affirm the district court’s dismissal of that claim.  With respect to the FCCPA claim, the Court found that the periodic statement unambiguously disclosed to the debtor that it was not seeking to collect the debt from him personally but rather merely was disclosing information about the mortgage lien no real property which survived his personal bankruptcy discharge. The debtor argued that even though these disclosures were made to him, the least sophisticated consumer might be confused, including by statements qualifying the disclosures as applicable to one “currently a debtor in bankruptcy” since the debtor’s bankruptcy case was now over.

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