Michigan Foreclosure Process Must Stop When Homeowners Dispute Validity of Debt (FDCPA) Per Sixth Circuit

Fair Debt Collection Practices Act Requires Michigan Foreclosure Attorneys to Stop the Sheriff's Sale When a Homeowner Disputes the Debt

Michigan Foreclosure Process Must Stop When Homeowners Dispute Validity of Debt (FDCPA) Per Sixth Circuit - Blog | HIlla Law Firm - Michigan_Foreclosures_Stop_FDCPA

The Sixth Circuit Court of Appeals ruled in January, in an unpublished decision, Scott v Trott Law, PC, that the “Fair Debt Letter” sent by a foreclosure attorney to a homeowner facing foreclosure constitutes an “initial communication” under the Fair Debt Collections Practices Act (FDCPA), which triggers the debtor’s right to dispute the debt or request verification of its validity.

Under the FDCPA, the Court noted, if the homeowner, within 30-days of receiving that Fair Debt Letter, does dispute the validity of the mortgage debt, the mortgage process must entirely cease.

Not simply those aspects which require proactive activity on the part of the mortgage servicer’s foreclosure attorney.

In Scott, the Sixth Circuit held that homeowner Scott’s dispute of the mortgage debt (by certified letter mailed within a week of receipt of the Trott Law’s Fair Debt Letter) not only required that Trott Law should cease mere collection of the debt but also required that Trott stop subsequent newspaper publication advertisements of the scheduled foreclosure sheriff’s sale from appearing, stop the home posting from occurring, and, notably, required that Trott affirmatively stop the sheriff’s sale from taking place by communicating this requirement to the sheriff conducting the foreclosure auction.

Trott Law, in that case, had not done the latter, and the sheriff proceeded with the foreclosure auction.

The Sixth Circuit rejected Trott’s contention that it had complied with the FDCPA because it had itself “ceased” collections activity. The Court held, instead, that “… ‘collection of a debt’ in a statutorily created process such as Michigan’s foreclosure by advertisement must include any activities that attempt to satisfy the essential statutorily required elements of that process.”

In other words, Trott was required to put a stop to each of the elements of Michigan’s foreclosure process, including the sheriff’s sale.

The Sixth Circuit remanded the district court’s decision for a further consistent ruling for Mr. Scott, but, in the larger scope of debt collections, this decision should also mean that disputing the validity of a debt will require any “debt collector” as defined by the FDCPA to affirmatively act to put a stop to actions already underway by third-party agents of various sorts.

Michigan Foreclosure and the FDCPA: The Bottom Line

The bottom line here is that, if you are facing foreclosure and you receive a "Fair Debt Letter" from Trott Law or any other Michigan foreclosure attorney, it is worth considering your options pursuant to the FDCPA if you think that you have a bona fide issue with regard to the validity of the debt. 

Contact Attorney John Hilla if you require legal assistance. Contact Us Here, or call (866) 674-2317. 

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