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02-1149 Veach v. Sheeks

By: dmc-admin//January 20, 2003//

02-1149 Veach v. Sheeks

By: dmc-admin//January 20, 2003//

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“[B]y stating the amount of the debt as $1,050, Sheeks took it upon himself to hold Veach liable for legal penalties that had not yet been awarded, penalties that for FDCPA purposes should have been separated out from the amount of the debt.

“When reviewing documents for compliance with the FDCPA, such as the letters sent to Veach by Sheeks, we use the ‘unsophisticated debtor’ standard. See Marshall- Mosby v. Corporate Receivables, Inc., 205 F.3d 323, 326 (7th Cir. 2000); Bartlett v. Heibl, 128 F.3d 497, 500 (7th Cir. 1997). This assumes that the debtor is ‘uninformed, naive, or trusting,’ and that statements are not confusing or misleading unless a significant fraction of the population would be similarly misled. Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir. 2000). In our earlier attempt to clarify the ‘amount of debt’ provision of 15 U.S.C. § 1692g(a)(1), we described the following language as a safe harbor for debt collectors when the amount of the debt varies from day to day: As of the date of this letter, you owe $___ [the exact amount due]. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your check, in which event we will inform you before depositing the check for collection. For further information, write the undersigned or call 1-800- [phone number]. Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C., 214 F.3d 872, 876 (7th Cir. 2000). We suggested this language to prevent confusion by debtors for whom the ‘exact amount due’ is a constantly shifting target due to accruing interest and accumulating unpaid charges. The reason for that variation, i.e., ‘interest, late charges, and other charges,’ is explained in the sentence following the amount of the debt as of the letter’s date. What is missing from that language is any mention of court costs, attorney’s fees, or other penalties which may be imposed by statute. That is because the ‘amount of the debt’ provision is designed to inform the debtor (who, remember, has a low level of sophistication) of what the obligation is, not what the final, worst-case scenario could be. The definition of a ‘debt’ according to the FDCPA is of an ‘obligation or alleged obligation . . . whether or not such obligation has been reduced to judgment.’ 15 U.S.C. § 1692a(5). Since Veach cannot be held liable for treble damages, court costs, or attorney’s fees until there has been a judgment by a court, they cannot be part of the ‘remaining principal balance’ of a claimed debt. Therefore, Sheeks’ notice misrepresented the actual debt CreditNet claimed that it was owed by Veach, a misrepresentation that violated 15 U.S.C. § 1692e.”

Reversed and remanded.

Appeal from the United States District Court for the Southern District of Indiana, Hamilton, J., Williams, J.

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