Some people treat a credit card as found money, and as if hitting that maximum limit is a goal to be achieved. Once accomplished, some consumers will default on the card and hope that the entire problem will somehow go away. In many of those situations, the process of debt collection will take place.
Last month, the Sixth Circuit Court of Appeals reversed a decision made by a lower court in the Northern District of Ohio involving credit card debt. The case has a couple of interesting facets to it. The debtor-plaintiff alleges that a debt collection law firm violated the Fair Debt Collection Practices Act by asking for attorneys’ fees.
You see, the plaintiff lives here in Ohio (where attorneys’ fees are not included in consumer contracts), while the credit card agreement included a choice-of-law clause that designated Utah (where attorneys’ fees can be included). So the case essentially boils down to this: which state’s laws are to be used to decide this credit card dispute?
The plaintiff claims Ohio law should hold sway, and that because Ohio doesn’t allow the collection of attorneys’ fees, that the collections law firm violated FDCPA by seeking the fees. The plaintiff argues that the bank that issued the card chose Utah unilaterally.
The lower court had granted a motion for judgment in the case, but the Sixth Circuit has ruled that the record simply doesn’t have enough evidence to determine which state’s laws should be applied. The court noted that the credit card contract was plausibly agreed to in Ohio, where the plaintiff-debtor lives, but that without evidence, it can’t be certain that Ohio law should apply.
So the Sixth Circuit has sent the case back to the lower court, telling it to either get the plaintiff to answer questions that could resolve the issue or to determine via limited discovery where most of the performance or transactions involving the card occurred.
Please see our Consumer Collections page to get more information about how Delev & Associates, LLC helps financial institutions collect delinquent accounts.