Eleventh Circuit gives its “stamp of approval” to a bankruptcy disclaimer contained in a communication that a discharged debtor contended violated FDCPA

The Eleventh Circuit in Helman v. Bank of America, 15-13672, – Fed. Appx.– (11th Cir. April 12, 2017) concluded that the least sophisticated consumer would not be misled that it was personally liable for a discharged debt where the monthly statements sent by the debtor’s bank contained a statement that the discharge precludes the bank from collecting the debt, but that foreclosure may result if the debt is not paid.

The basis of the debtor’s claims in Hellman was that the monthly statements sent after her bankruptcy discharge were implied assertions of a right to collect against her personally. In rejecting this claim, the court noted that the debtor’s bankruptcy discharge informed her that it “prohibit [ed] any attempt to collect … a debt that has been discharged” but that “a creditor may have the right to enforce a valid lien, such as a mortgage or security interest, … after the bankruptcy, if that lien was not avoided or eliminated.” This was consistent with the bank’s right to seek payment under 11 U.S.C. § 524.

The court also recognized that the monthly statements contained terms that other courts have previously suggested might indicate an attempt to collect personally against a debtor. But the “express language of the home mortgage monthly statement [in this case] could not be clearer:”


The Impact of the Bankruptcy: Our records indicate that in the past you received a discharge of this debt in a bankruptcy case. Section 524 of the Bankruptcy Code tells us the discharge of this debt means you have no personal obligation to repay it. The discharge also protects you from any efforts by anyone to collect this discharged debt as a personal liability of the debtor. You cannot be pressured to repay this debt. On the other hand, the security agreement allows foreclosure if the requirements under the loan documents are not met.

The least sophisticated consumer reading this notice “with some care” would be informed that she (1) has no personal obligation to repay the debt; (2) is not personally liable for the debt; and (3) cannot be pressured to repay the debt. A debtor could therefore not have been misled.

However, another statement, on the debtor’s home equity line of credit, was preceded by the heading: “If You Are Currently a Debtor in a Bankruptcy.” The Court deemed the difference in the language of the two letters ultimately to be immaterial. “If we were to strain and excuse a consumer who declines altogether to read the message under the heading because she had already been discharged and thus is no longer currently in bankruptcy—and if this monthly statement had to be evaluated in isolation—this home equity monthly statement might have given us some pause about the extent to which a least sophisticated consumer could have been misled.”

But the Court did not need to make that determination because the home equity statement was far from the only available source of information. The least sophisticated consumer in the debtor’s position would have had the following knowledge: that she had been through the bankruptcy process and received a discharge; that she had no personal liability on the home mortgage; and that the debt had been discharged but that the bank could still enforce its mortgage.

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