In the recently-decided Gburek v. Litton Loan Servicing LP, the Seventh Circuit had occasion to add color to what communications will be deemed “in connection with the collection of any debt” under the Fair Debt Collection Practices Act (FDCPA). Gburek was in default on a mortgage loan serviced by Litton. In December 2007, she received two letters relating to her mortgage loan. The first, from Litton, offered Gburek the opportunity to discuss “foreclosure alternatives” and requested certain financial information from her. The second was from Titanium Solutions, a company that partners with mortgage servicers such as Litton to facilitate communication between servicers and homeowners on the brink of foreclosure. The Titanium letter indicated that it was being sent at the request of Litton. It similarly sought certain financial information from Gburek so that it could work with her to avoid continuing arrearages on her mortgage and avoid foreclosure. Gburek responded to the letters by filing a complaint against Litton for violations of the FDCPA. The district court dismissed the complaint, concluding that the letters were not sent “in connection with the collection of” Gburek’s debt because they did not expressly demand payment of Gburek’s debt.
The Court of Appeals reversed. It held that the district court had erred in holding that the lack of an express demand for payment meant that a communication was not “in connection with the collection of” a debt for purposes of the FDCPA. The Court noted that neither the Seventh Circuit nor any other circuit had established a “bright-line rule” for determining whether a communication was made in connection with the collection of a debt. Rather, the Court held, the absence of a demand for payment is just one factor to consider when making the “commonsense” determination of whether a communication was made in connection with the collection of a debt.
In reaching this conclusion, the Court drew primarily on three of its prior decisions: Bailey v. Security Nat’l Servicing Corp., 154 F.3d 384 (7th Cir. 1998), Horkey v. J.V.D.B. & Assocs., 333 F. 3d 769 (7th Cir. 2003), and Ruth v. Triumph P’ships, 577 F.3d 790 (7th Cir. 2009). In Bailey, the loan servicer had sent a letter to a delinquent debtor who had entered into a forbearance agreement listing the next four payments due and offering to “work with” the debtor to resolve the underlying delinquency. The Bailey court concluded that this letter had not been sent “in connection with the collection of” a debt. According to the Court, the lack of a demand for payment was one factor that led to that conclusion, but other salient facts included the fact that although the original loan was past due, the borrower was current under a forbearance agreement and the fact that the letter simply warned the borrower of the consequences of missing a forbearance payment in the future. Thus, the Court held, the lack of a demand for payment was just one of several factors that led to the conclusion in Bailey.
Turning to Horkey and Ruth, the Court concluded that both undermined the district court’s conclusion that the lack of a demand for payment was dispositive. In Horkey, the Seventh Circuit had held that a debt-collector’s telephone call to a debtor’s co-worker, in which the collector asked the co-worker to tell the debtor “to quit being such a [expletive] bi***,” was a communication in connection with an attempt to collect a debt, even though no express demand for repayment was made. Thus, the Court noted, “Horkey clarifies that a communication need not make an explicit demand for payment in order to fall within the FDCPA’s scope.” The Court buttressed this conclusion with its more recent decision in Ruth. In that case, a debt collector sent a debtor both a collection letter and a privacy notice in the same envelope. Notwithstanding that the privacy notice contained no demand for repayment, the Ruth court concluded from context that it was a communication sent in connection with the collection of a debt and fell within the scope of the FDCPA.
Reviewing the letters sent to Gburek in light of this precedent, the Court held that the communications from Litton and Titanium fell within the reach of the FDCPA. The Court characterized the letters as opening communications in an attempt to collect on Gburek’s defaulted home loan. Even though they did not expressly seek payment, the Court viewed them as “an offer to discuss Gburek’s repayment options, which qualifies as a communication in connection with an attempt to collect a debt.” They therefore fell within the scope of the FDCPA and the district court had erred in dismissing Gburek’s complaint.