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5th Circuit FDCPA and Consumer Bankruptcy Rulings for 2021

fdcpa communicationIn its top consumer credit law decisions of 2021, the U.S. Court of Appeals for the Fifth Circuit determined that settlement of an FDCPA claim does not trigger an attorney fee award, examined third-party contact as a “communication” under the FDCPA, and ruled there was no “partial surrender” of collateral in a Chapter 13 plan.

Tejero v. Portfolio Recovery Assocs., LLC, 993 F.3d 393 (5th Cir. 2021)

In Tejero v. Portfolio Recovery Assocs., LLC, the Fifth Circuit affirmed a trial court’s denial of an award of attorney’s fees to a debtor who settled his claims against a debt collector for purported violations of the federal Fair Debt Collection Practices Act and parallel state law consumer protection statutes.

The Fifth Circuit concluded that the fee-shifting provision under the FDCPA for a “successful action to enforce the foregoing liability” requires that a lawsuit generates a favorable end result compelling accountability and legal compliance with a formal command or decree under the FDCPA and that reaching settlement before any such end result does not entitle a plaintiff to an award of attorney’s fees under the statute. Because the debtor’s lawsuit was resolved by a settlement, it was not a successful FDCPA action as defined by section 1692k(a)(3).

Fontana v. HOVG LLC, 989 F.3d 338 (5th Cir. 2021)

In Fontana v. HOVG LLC, the Fifth Circuit affirmed the dismissal of a debtor’s claims against a debt collector alleging that a telephone call placed to his sister constituted an improper third-party communication in connection with the collection of a debt, in violation of the FDCPA.  

The Fifth Circuit concluded that the conversation between the debtor’s sister and the debt collector representative was not a “communication” subject to the FDCPA because the representative’s mere identification of the debt collector’s name and mentioning of “an important personal business matter” did not convey any information regarding a debt or suggest its existence.

After failing to reach a debtor to discuss a consumer debt allegedly owed, a telephone representative of a debt collection agency dialed a phone number owned by the debtor’s sister, who answered. The representative asked if she was speaking to the debtor and was informed that the dialed phone number belonged to the debtor’s sister.  The representative then identified herself as calling on behalf of the debt collector, without conveying any information regarding the debt at issue, and requested that the debtor call the debt collector back at the number that appeared on the sister’s caller ID. 

The debtor filed a federal lawsuit alleging the communication with her sister violated § 1692c(b)’s prohibition against third-party communications. The debt collector moved to dismiss the complaint for failure to state a claim, and the motion was granted with prejudice. The debtor appealed.

On appeal, an issue before the court was whether the debt collector’s contact with the sister was permitted as an attempt to obtain “location information” under § 1692b or whether the debt collector violated § 1692c(b) when it left a message with his sister asking her to have him return the collector’s call. Section 1692b permits debt collectors to communicate with third parties “for the purpose of acquiring location information about the consumer” — his “place of abode… telephone number… or [] place of employment.” On the other hand,  § 1692c(b)  forbids debt collectors from “communicat[ing], in connection with the collection of any debt, with any person other than the consumer, his attorney . . .” and a few other exceptions. A debtor’s sister is not among those exceptions.

But in order to get to § 1692c(b)  there must be a “communication,” so the Fifth Circuit analyzed whether the call constituted a “communication.”  The FDCPA defines a communication as “the conveying of information regarding a debt directly or indirectly to any person through any medium.”

The Fifth Circuit held that the call placed to the debtor’s sister did not constitute such a communication.

The Court noted that the debt collector representative did not mention the debt or provide any information about it, instead merely mentioning that she was calling for “an important personal business matter” and providing the debt collector’s name.  Although the debt collector’s name includes the word “Credit,” other courts have held that knowing the name of a debt collector does not imply the existence of a debt.  Brown v. Van Ru Credit Corp., 804 F.3d 740, 742 (6th Cir. 2015) (“the word ‘credit’ refers to a category of financial activities far broader than debt collection”). 

The Fifth Circuit further noted that the limited information provided by the debt collector’s representative during the call did not indirectly convey any information that a debt existed or imply that the call was in connection with the debt, and was thus distinguishable from the Eleventh Circuit’s ruling in Hart v. Credit Control, LLC, wherein a message stating, “This call is from a debt collector” qualified as a “communication” because it “indicated that a debt collector was seeking to speak with [the person] as a part of its efforts to collect a debt.”  Hart v. Credit Control, LLC, 871 F.3d 1255, 1256, 1258 (11th Cir. 2017); see also, Lavallee v. Med-1 Sols., LLC, 932 F.3d 1049, 1055 (7th Cir. 2019) (holding that a message that contained only the name of the debt collector was not a “communication” under the Act); accord Marx v. Gen. Revenue Corp., 668 F.3d 1174, 1177 (10th Cir. 2011) (holding that a fax that contained the name of the debt collector and the debtor’s account number was not a “communication” because it could not “reasonably be construed to imply a debt”).

Because the debt collector’s call did not convey “information regarding a debt,” nor even imply the existence of a debt to constitute a “communication” under the FDCPA, the Fifth Circuit held that the debtor failed to plead sufficient facts to establish an FDCPA violation and affirmed the trial court’s dismissal.

Evolve Fed. Credit Union v. Barragan-Flores (In re Barragan-Flores), 984 F.3d 471 (5th Cir. 2021)

In Evolve Federal Credit Union v. Barragan-Flores, the Fifth Circuit affirmed a trial court’s denial of a consumer’s Chapter 13 bankruptcy plan that proposed a “partial surrender” of a cross-collateralized loan.

The Fifth Circuit held that while the text of 11 U.S.C. § 1325(a)(5) allows debtors to select a different option “with respect to each allowed secured claim,” it does not allow a debtor to select different options for different collateral securing the same claim.

In June 2017, the consumer filed for Chapter 13 bankruptcy at a time when he had outstanding balances on two car loans with the defendant. The loans were cross-collateralized, meaning that car A and car B were both pledged as collateral for each loan. The defendant had filed two separate proofs of claim, one for the car A loan and one for the car B loan. The consumer decided that he could only afford to keep one car, so his bankruptcy plan, citing 11 U.S.C. § 1325(a)(5), proposed that he retain car A, “cram down” the car A claim, and surrender car B to the defendant as collateral for the car B claim.

The secured creditor objected to the plan, specifically to the “partial surrender” of collateral under the car B claim, arguing that the cross-collateralization provisions in the loans prevented the consumer from surrendering car B and retaining car A. The bankruptcy court overruled the objection and entered an order confirming the plan. The defendant filed a motion for a new trial, which the bankruptcy court denied. The secured creditor appealed to the U.S. District Court which reversed the bankruptcy court’s order confirming the plan and remanded the case for further proceedings in accordance with its order. The consumer appealed the District Court’s ruling.

Section 1325(a) of the Bankruptcy Code contains a number of requirements regarding a bankruptcy court’s confirmation of a Chapter 13 plan. Subsection (a)(5) governs a plan’s treatment of an allowed secured claim and Section 1325(a)(5)(B) provides the so-called “cram down” option, which allows the debtor to keep the collateral over the objection of the creditor and provide the creditor with payments that, over the life of the plan, will total the present value of the collateral. 

On appeal the consumer argued that the plain language of section 1325(a)(5) requires a debtor to select an option “with respect to each allowed secured claim,” and allows debtors to select different options for each individual claim against their estate. The secured creditor, on the other hand, argued that because section 1325(a)(5) presents its options using the conjunction “or,” the consumer must select one of the three options for each secured claim — he may not select different options for different collateral securing the same claim. Thus, because the secured creditor’s loans were cross-collateralized, he could only choose one option applicable to all the collateral.

The Fifth Circuit agreed with the secured creditor, reasoning that section 1325(a)(5)’s use of the conjunction “or” between the options provided in subsections (A), (B), and (C) makes it clear that debtors may choose only one of those three options for each claim. The Court held that, even though section 1325(a)(5) does allow a bankruptcy plan to select a different option for each claim, here the plan violates section 1325(a)(5) when it selects different options for different collateral securing the same claim.

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Keith Wier focuses his practice on the defense of individual and class action suits under state and federal consumer statutes, professional liability defense, and compliance issues for members of the collection industry. He has substantial experience defending collection agencies, law firms, debt buyers, and creditors in consumer litigation in Texas and is certified as a specialist in Consumer and Commercial Law by the Texas Board of Legal Specialization. His professional liability defense work includes defense of realtors, insurance agents and brokers, lawyers, and other professionals. Keith is a frequent lecturer and author on defense and compliance issues facing the legal malpractice, collection, credit, and debt buying industries and has taught at the University of Houston Law Center. For more information, see

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