FDCPA Statute of Limitations has Passed on Student Debt, Says Borrower

The Federal Debt Collections Act (FDCPA) was created to prevent debt collectors from using manipulative, deceptive, and abusive means to collect debts from individuals.

According to the Federal Trade Commission (FTC) the FDCPA statute of limitations prevents collection agencies from threatening legal action on the part of a lender for a debt that has gone into and remained in default for a certain period of time without any prior effort to sue.

It has become commonplace for big financial institutions to not want to spend the money to litigate against individuals for debt owed to them. Often, they allow the FDCPA statute of limitations to pass on the debt and then sell it to agencies or lawyers that specialize in collection.

These non-original lenders have been known to violate the FDCPA statue of limitations by either threatening or implying legal action against a debtor. It is not unusual in communications where this is done to fail to disclose that the monies owed are “time-barred”—a term coined for debt that has passed the date where legal action can be taken against the borrower.

In a new lawsuit filed in U.S. District Court on July 25, 2018, consumer plaintiff Tonya F. alleged that defendants Student Loan Solutions and Williams & Fudge Inc. have engaged in deceptive collection activity in violation of the FDCPA and FDCPA statute of limitations.

According to the lawsuit, Tonya ceased to pay on a student loan around April 1, 2008. The FDCPA statute of limitations on the loan was “either 10 years if they [the loans] are considered contracts in writing, or 5 years, if they are not.” Around April 6, 2018, over 10 years later, Williams & Fudge allegedly sent Tonya a letter regarding the time-barred debt purportedly acting on behalf of Student Loan Solutions Inc.

The letter allegedly fails to mention that the student loan debt consisting of several private loans had passed the FDCPA statute of limitations. According to Tonya, it did ask her to get in touch with them for a full resolution of the debt in question.

When Tonya inquired further, she says a second letter was sent to her that specified the amount of debt as slightly under $90,000. This communication also allegedly failed to mention the time-barred nature of the loans. Because of the demands inherent in the letters, Tonya says she secured her own legal counsel, costing her valuable time and money.

Tonya brings one count of violation of the FDCPA against the defendants in this class action lawsuit. She seeks to represent two separate Classes of Illinois plaintiffs. The first Class includes those that have received letters on time-barred debt beyond 10 years from Student Loan Solutions. The second Class includes those that have received like letters on time-barred debt beyond 10 years from Williams & Fudge.

Tonya is asking for certification as a class action and for statutory and actual damages according to proof provided at trial. She requests that consideration be given with awards for all attorney fees and costs of litigation.

The Student Loan Solutions Lawsuit is Case No. 1:18-cv-05086 in U.S. District Court for the Northern District of Illinois, Eastern Division.

Join a Free Unfair Collection Practices Class Action Lawsuit Investigation

If you’ve been hit with unfair debt collection practices, you may have a legal claim and could be owed compensation for violations of the Fair Debt Collection Practices Act (FDCPA).

Get a Free Case Evaluation Now

DISCLAIMER: Debt collection itself is not illegal. However, debt collection firms collecting on consumer debts must adhere to the FDCPA. Even though debt attorneys are investigating these companies, their debt collection practices may be legal.