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Debt Collectors Catch a Break in Gorsuch’s First U.S. Supreme Court Opinion


The first U.S. Supreme Court opinion in which Justice Niel Gorsuch wrote may not be of much note for its eloquence. However, you will find it means a great deal to you if you ever have – or ever will be – on the other end of the line when a debt collector calls to harass you in the middle of the night. The decision in Henson v. Santander gives bottom-feeder debt collectors a pass to violate consumer rights and basic protections. Of course, it’s not shocking that Gorsuch, appointed by President Donald Trump, would defer to the big business party in the case. However, it seemed lost on the conservatives of the court that this ruling could have real-life implications that favor financial predators.

It is the hope of our Miami debt defense attorneys that at this point, Congress will weigh in to repair the damage. However, given the makeup of the current power structure, that’s unlikely anytime soon. In this matter, an auto financial group issued a series of car loans and then sold the debts that defaulted to a bank in Spain, which then began the collections process on those who had not paid their bills.

Plaintiffs subsequently filed a lawsuit against that bank, Santander, alleging they had violated the Fair Debt Collection Practices Act of 1977, as they had engaged in harassment and intimidation. That federal law, established many decades ago, protects people who owe money from exactly this kind of behavior. The law also gives these consumers the right to file litigation against abusive debt collectors, who can in turn be slapped with heavy fines for misconduct.

However, defendant bank in this action argues that it was not bound by the FDCPA because it was the original creditor. Wait – what? Yes, the bank argued that because it purchased the debts outright and wasn’t attempting to collect anything on someone else’s behalf, it was exempt from federal laws against debt collector harassment.

Two lower courts sided with the bank, but the matter then went to the U.S. Supreme Court.

The Gorsuch opinion is rather dry in that it must perform the obligatory examination of what it means to be a “debt collector” The definition used in the 1977 federal law, however, indicates that debt collectors are those whose primary purpose is collecting debts “owed… another.” In that context, this bank may not be a debt collector. But of course, the old definition on which the court relied predates the multibillion-dollar debt-buying industry, which buys debts that have defaulted for pennies on the dollar and then turn around and harass debtors for the entire balance.

The question is whether these debt buyers should be exempted from the rule that prohibits abuse toward consumers simply because they are collecting on their own behalf as opposed to on behalf of a third party. The U.S. Supreme Court said yes, though it should be noted that ruling essentially ignores the first half of the definition of “debt collector” which is that the principle purpose of these organizations is to collect debts.

Even if we consider Gorsuch’s conclusion a reasonable one, it nonetheless will have severe consequences for those who owe money. Our Miami debt defense lawyers are here to answer your questions and help you understand your legal rights.

If you’re battling debt collection in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday at 5 p.m. on “Debt Warriors with Bruce Jacobs and Court Keeley,” discussing foreclosure topics that matter to YOU.

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