Florida federal court rejects debt collection claim based on time-barred debt

The Plaintiff in Garrison v. Caliber Home Loans, Inc., No. 616CV978ORL37DCI (M.D. Fla. Jan. 10, 2017) alleged that her mortgage loan servicer violated the FDCPA and the Florida collection practices act by, among other things, attempting to collect a debt the servicer knew was time-barred. The court held that the plaintiff could not base her claims on the statute of limitations issue because: (1) the statute of limitations is “a defense, not an affirmative cause of action;” (2) unlike a “statute of repose,” a statute of limitations does not terminate a lien or extinguish a claim; and (3) the applicability of any statute of limitations cannot be resolved before a legal action is brought to enforce the loan. Defendant countered with Eleventh Circuit authority, and an FTC publication which provided that it is ‘against the law for a collector to sue you or threaten to sue you on a time-barred claim.” But the FTC Publication also advised consumers that: “[t]he statute of limitations for a debt is usually different from the reporting period for a debt on your credit report. In general, negative information stays on your credit report for seven years;” that debt collectors “are allowed to contact you about time-barred claims;” however, if asked by a consumer whether a debt is beyond the SOL, “the law requires” that any answer from the debt collector must “be truthful;” and the “decision to pay a time-barred debt is up to [the consumer].” According to the court, “[t]hese seemingly inconsistent statements in the FTC Publication simply do not support Plaintiff’s reliance on the [statute of limitations issue] to support her claims.” The court distinguished the Eleventh Circuit cases holding that “for reasons peculiar to bankruptcy proceedings, *** bankruptcy debtors can assert FDCPA adversary proceedings based on a creditor’s filing of a proof of claim that is entirely unenforceable under the applicable statute of limitations.” The court found these decisions unavailing because they did not concern non-judicial debt collection activity of a partially time-barred claim. The court concluded that the statute of limitations issue did not provide a plausible basis for Plaintiff’s claims. Instead, the issue should be raised—if at all—as an affirmative defense to an actual collection or foreclosure action.

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