Debt Collector Reliance on Creditor Determination of Debt

In Cooper v. Litton Loan Servicing, et al, 253 B.R. 286 (N.D.Fla.2000), the court reviews, among other issues, whether a debt collector faces liabilty under the Fair Debt Collection Practices Act (FDCPA) and the Florida Consumer Credit Practices Act (FCCPA) for attempting to collect a debt, the amount of which was determined by the creditor and communicated to the debt collector, but turned out to be incorrect.

In this case a law firm was hired to collect a debt.  The consumer had filed for bankruptcy and the attorney filed a Proof of Claim and a Motion to Lift Automatic Stay with the bankruptcy court, the proper actions for a creditor to take under the bankruptcy code.  The actual amount of the debt was disputed by the debtor, who brought a claim for violation of the FDCPA and FCCPA seeking statutory and punitive damages.

The court ruled for the attorney stating, “[a]ttorneys and debt collectors are entitled to rely on the information they receive from the creditor.  They are not held strictly liable when they mistakenly attempt to collect amounts in excess of what is due, if they reasonably relied on information provided by their clients.”  Smith v. Transworld Systems, Inc., 953 F.2d 1025 (6th Cir. 1992); Jenkins v. Union Corp., 999 F.Supp. 1120 (N.D.Ill. 1998); Ducrest v. Alco Collections, Inc., 931 F.Supp. 459 (M.D.La. 1996) See Also Amond, 175 F.3d 1013 (4th Cir. 1999) and Jenkins, 124 F.3d 824 (7th Cir. 1997).  The court also goes on to site the principal that lawyers do not face strict liability for asserting in good faith a claim that is ultimately rejected by the court.

The FDCPA does not require that the debt collector make an independent investigation of a debt claimed to be owed by a creditor, and it does not require a debt collector to dispute the creditors construction of the contract creating the debt.  Cooper citing Ducrest v. Alco Collections, Inc., 931 F.Supp. 459 (M.D.La.1996) citing Smith v. Transworld Systems, Inc., 953 F.2d 1025 (6th Cir. 1992).

The Court ruled, in relation to the claim against the subject attorney, that the Complaint in this case failed to state a claim on which relief can be granted, because there are no allegations tending to show an unreasonable reliance on or knowledge of a miscalculation of the amount owed.


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