Lack of Notice of Bankruptcy Filing Proves Fatal to FDCPA Claim

Creditors and debt collectors may rest assured that they are not violating the Fair Debt Collection Practices Act (FDCPA) when sending debt-collection communications prior to any knowledge of a debtor’s bankruptcy filing. In Carrasquillo v. CICA Collection Agency, Inc., the district court for the District of Puerto Rico relied on a Third Circuit case when finding a debt collector lacked the requisite knowledge and intent to violate § 1692e of the FDCPA. Consequently, the court dismissed the debtor’s case with prejudice — barring the debtor from bringing this specific FDCPA claim against the debt collector again.

As background, the plaintiff did not notify the debt collector, CICA Collection Agency, Inc. (CICA), of his bankruptcy filing prior to the debt-collection communication at issue. Although, the creditor and non-party to the action, Claro Puerto Rico (Claro) was listed on the bankruptcy petition, Claro also failed to inform CICA of the plaintiff’s bankruptcy filing. After receiving the debt-collection communication, the plaintiff, through his bankruptcy attorney, filed suit against CICA for violation of § 1692e of the FDCPA. The plaintiff alleged that at the time CICA mailed the debt-collection letter to him, CICA knew or should have known that he had filed for bankruptcy and was under the protection of the bankruptcy code. The court found the plaintiff’s arguments unpersuasive.

Specifically, the court articulated that “a debt collector’s unknowing violation of an automatic [bankruptcy] stay does not transform an otherwise accurate collection letter into a ‘false representation’ within the meaning of § 1692e,” on the other hand, a “false representation under § 1692e(2)(A) requires that the misrepresentation be intentional.” The court found that the provision prohibiting debt collectors from using false or misleading representation in the collection of any debt was not intended to punish debt collectors for failing to discover a debtor’s bankruptcy filing, but was instead intended to prohibit only knowing or intentional conduct by debt collectors.

The court did not penalize the debt collector for its lack of knowledge or even lack of diligence in determining whether the debtor was protected by the bankruptcy code before mailing the debt-collection letter. Instead, it appears the court penalized the debtor for failing to notify the debt collector of the bankruptcy filing resulting in dismissal of the claim with prejudice. Had the plaintiff informed CICA of his bankruptcy petition, and CICA nevertheless mailed out the collection letter following notice, the plaintiff’s claim may have survived.