Suing a Debt Collector? Now They Can Buy Your Lawsuit

A federal judge opens the door for bare-knuckled agencies to avoid accountability. If upheld, a law protecting consumers may be defanged.

Bloomberg, By Paul Barrett, August 16

Can a debt collector accused of crossing the line avoid liability by buying a consumer’s legal claim out from under her?

A federal judge in Las Vegas said yes. The case deserves attention because if the U.S. Court of Appeals in San Francisco affirms the judge’s ruling, you can be sure that more debt collectors will attempt this counter-intuitive maneuver to shield themselves from federal liability.

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A few months later, CCCS asked a federal judge to dismiss the fair-debt collection claim on the theory that CCCS didn’t want to sue itself. Arellano opposed the motion. U.S. District Judge Jennifer Dorsey noted that the case “presented an interesting situation” and then ruled for CCCS, effectively killing Arellano’s lawsuit. The hearing took 11 minutes.

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