08 Aug Some Attorneys are Not Debt Collectors – In House Counsel
In-house counsel are exempt from the Fair Debt Collection Practice Act [FDCPA]. The United States Supreme Court held in Heintz vs Jenkins, 514 U.S. 291 (1995), that an attorney collecting a debt for another person had to obey the FDCPA rules. An attorney who works as an in-house employee for a creditor is not a debt collector under the FDCPA when that attorney collects his company’s own debts because the law only covers those who collect on behalf of someone else. The in-house attorney is considered an employee of the creditor and is not considered a separate entity.
This distinction is important when one compares the collection tactics employed by certain creditors. While most debt collectors must obey the FDCPA, some creditors and in-house counsel can violate that law with impugnity and not be prosecuted because they do not meet the legal definition of a FDCPA debt collector. So while FDCPA collection attorneys can only sue you where you live as Jay Fleischman points out, in Where Can I Be Sued For A Debt, some lawyers will sue you anywhere in your state. Chase Bank typically sues Illinois residents in Cook County Illinois even though those people live many miles away. This creates a hardship for a resident of southern Illinois who lives hundreds of miles away from the Cook County Courthouse and are unable to appear and defend the collection lawsuit. Chase gets away with this action because Chase hires in-house counsel to handle the cases. The lawyers typically send defendants a letter that Chase will dismiss the lawsuit and refile in locally if the defendant objects, however, most collection defendants do not respond and face default judgments in Cook County. Congress should close the in-house counsel loophole and amend the FDCPA to cover all persons who attempt to collect a debt.
Andy Miofsky, Esq.
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