Bank argues that it is not subject to the FDCPA

In Florida and across the U.S., debt collectors and creditors are required to follow different procedures when they are attempting to collect debts that are owed. The practices of debt collectors are stringently regulated under the Fair Debt Collection Practices Act. By contrast, creditors who originate their own loans are able to collect on them without being regulated by the FDCPA.

A case that has been heard in April by the Supreme Court of the United States concerns whether or not Santander Consumer USA meets the definition of a debt collector under the FDCPA or is instead a creditor as the bank contends. The case involves Santander’s purchase of a group of loans from CitiFinancial, which it then attempted to collect.

Santander argues that since it purchased the loans, it then stepped into the shoes of CitiFinancial, allowing it to collect without being regulated by the FDCPA. The debtors argue that Santander purchased the loans from CitiFinancial, which is a debt collector that is regulated by the FDCPA and that Santander should likewise be regulated by the FDCPA. The loans that are at issue in the case are the subject of a separate class action lawsuit that has been filed against CitiFinancial.

People who are struggling to pay their debts may be able to obtain financial relief and to stop creditor harassment by filing petitions for bankruptcy. With Chapter 13 petitions, debtors may have a more affordable repayment plan. If they successfully complete it, they may then have much of their remaining unsecured debt balances discharged. Because the repayment plans last for either three or five years, debtors who file for Chapter 13 bankruptcy protection may have an extended period to catch up their important debts. Creditors may not continue collection activities while bankruptcy cases are pending, and bankruptcy may give the debtors a fresh start.