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AG Derek Schmidt: Companies that collect debt purchased after default should be subject to federal law

Release Date: Feb 24, 2017

TOPEKA – (February 24, 2017) – Kansas Attorney General Derek Schmidt today asked the U.S. Supreme Court to hold that federal debt-collection laws apply to companies that buy defaulted debt and then try to collect it.

In a brief asking the U.S. Supreme Court to review a lower court’s decision, Schmidt and the attorneys general of 27 other states and the District of Columbia argue that companies that regularly attempt to collect debts purchased after the debts have fallen into default are “debt collectors” subject to the Fair Debt Collection Practices Act (FDCPA).

“Debt-collection abuse is one of the most frequent consumer complaints made to state attorneys general,” the attorneys general wrote. “Abusive debt collectors also strain state resources by clogging the court systems, particularly small-claims courts, with their filings. …  The Amici States thus have a direct interest in ensuring that the FDCPA is correctly interpreted to cover those who attempt to collect defaulted debt they have purchased. Debt buyers who purchase defaulted consumer debt—usually for pennies on the dollar— and then attempt to collect that defaulted debt are, from a consumer’s perspective, no different from debt collectors who do not own the debt. While debt buyers can and should be able to pursue lawful means of debt collection, the law should protect consumers from unscrupulous and harassing collection tactics by such companies.”

The case is Henson v. Santander Consumer USA, Inc. A copy of the brief is available at http://bit.ly/2kV1ZJ6.

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