The Ninth Circuit Court of Appeal has affirmed the rights of consumers to sue law firms for violations of the fair debt collection laws and other claims when the law firm sues a consumer on a debt even though it is aware of a potential statute of limitations issue. The Court of Appeal held that the collection law firm was not relieved of liability because it relied on the representation of its creditor-client (a junk debt buyer) that the claim was not time-barred. The Court of Appeal further held that the law firm’s attempt to collect attorneys’ fees and costs from the consumer plaintiff violated the fair debt collection laws because the law firm did not have any proof of a written agreement entitling it to attorneys’ fees and costs.
The case is McCollough v. Johnson, Rodenburg & Lauinger, LLC, 2011 WL 746892 (9th Cir. Mar 9, 2011). The Ninth Circuit’s decision follows the US Supreme Court’s decision last year that a mistake of law is not a defense to an FDCPA claim.
If you are sued on a debt, consult a lawyer immediately. Reports are that about 90% of collection lawsuits against consumers result in default judgments…meaning the consumer doesn’t even show up in court. The courts are continually affirming the rights of consumers against unscrupulous creditors/debt buyers and the law firms they hire to collect on alleged debts.