Texas Woman Takes Issue with Collection Letters Regarding Time-Barred Debt

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A proposed class action has been filed against Midland Credit Management, Inc. (MCM) and Midland Funding LLC over allegedly misleading collection letters the defendants sent to a Texas woman. The letters supposedly concerned a time-barred debt for which the statute of limitations had expired, barring debt collectors from commencing litigation against the plaintiff. According to the case, the letters contained several settlement offers and informed the plaintiff that MCM would not sue her.

The suit takes issue with what the letters allegedly failed to disclose, noting they neglected to mention that Midland Funding, the woman’s creditor, also could not sue her and that any payments she made could renew the debt’s statute of limitations and expose her to the possibility of a lawsuit. The complaint further argues that the letters were misleading as to MCM’s right to sue the plaintiff, pointing out that the notices’ “carefully crafted language” didn’t directly inform the woman she was protected from a lawsuit, and instead implied that the debt collector had chosen not to sue her. From the complaint:

The only reason to use such carefully ambiguous language is the expectation that at least some least sophisticated consumers will misunderstand and will choose to pay on the ancient, time-barred debts because they fear the consequences of not doing so.”

Lastly, the case argues that the defendants failed to inform the plaintiff that her acceptance of a settlement offer could have tax consequences, noting that her creditor would report her debt forgiveness to the Internal Revenue Service.