Thursday, April 06, 2006

Fourth Circuit reminds lawyers that they are debt collectors too

In Wilson v. Draper & Goldberg, the Fourth Circuit considered whether attorneys are covered by the Fair Debt Collection Practices Act. In this foreclosure action, a divided panel held that the attorneys were debt collectors under the Act. According to the Court:

Our decision is not intended to bring every law firm engaging in foreclosure proceedings under the ambit of the Act. Nevertheless, it is well-established that the Act applies to lawyers "who 'regularly' engage in consumer-debt-collection activity, even when that activity consists of litigation." Heintz, 514 U.S. at 299. Congress enacted the Act to "eliminate abusive debt collection practices by debt collectors." 15 U.S.C.A. 1692(e) (West 1998); see also Carroll, 961 F.2d at 460. As such, lawyers who regularly engage in consumer-debt-collection activity should not be allowed to thwart this purpose merely because they proceed in the context of a foreclosure.

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