Where Can I Be Sued For A Debt?

05 Aug Where Can I Be Sued For A Debt?

Many states provide for where a person may be sued; some say that the lawsuit must be filed where the person lives, where the Plaintiff lives, or where the wrong occurred. Under the Fair Debt Collection Practices Act, however, many of those options are removed.

Under the FDCPA, unless a debt collector is suing to enforce an interest in real property, it must bring any action on a debt against a consumer in the judicial district where the consumer signed the contract at issue or in the judicial district where the consumer resided when the suit was filed. 15 U.S.C. § 1692i(a)(2).

The recent case of HESTER v. GRAHAM, BRIGHT & SMITH, P.C. AND R. SPENCER SHYTLES, from the 5th Circuit Court of Appeals, puts a fine point on this requirement. In this case, Ms. Hester entered a retail installment contract in Tarrant County, Texas, and lived in Smith County, Texas when a lawsuit was filed against her for collection of an unpaid debt. In a case brought against the debt collector and their lawyers under the FDCPA, she argued that the defendants sued her in an improper judicial district when they sued her in Dallas County, Texas.

The court, in this decision relating to whether the lawyers who filed suit against Ms. Hester were debt collectors under the FDCPA (they are) and on the issue of attorney’s fees to be awarded to Ms. Hester’s lawyer for bringing the case, dispensed with the issue of proper court venue for the debt collection lawsuit. The fact that the consumer was sued in a location other than where she lived or where the contract was first entered into was deemed a violation of the FDCPA.

So if you’re sued for a debt, look carefully to where the debt collector sues you. If it is in the wrong place, you may have the right to sue for money damages under the FDCPA.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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