Can debt collector buy back your suit against it in an auction of your assets?

A Nevada resident was receiving dunning notices and responded by filing a lawsuit against the debt collector under the federal Fair Debt Collection Practices Act. The collector subsequently filed a notice of execution including, among her property to be seized and auctioned, her rights under that lawsuit. It then attended the auction of her assets and bought that right for $250, thus nullifying the claim against itself. Should courts uphold? [Consumerist]


  • I have to give them credit for exemplary sneakiness. Homer Bedloe would be proud.

  • The debt collector is no doubt represented by the firm of Moebius and Klein.

  • I would think this needs to be an exception to the rule for all the obvious reasons.

  • Although legally this seems legitimate, equitable considerations should trump this backhanded maneuver and strike it down.

    Whether or not the woman owed the medical bills involved is not the issue. The FDCPA was enacted to prohibit unfair debt collection practices. It is easy to follow its provisions, and failure to do so subjects the debt collector to actual damages, statutory damages of up to $1000 and attorney’s fees. The availability of attorney’s fees drives FDCPA litigation.

    As relevant here, debt collection notices cannot be confusing to the “least sophisticated consumer.” Telling the woman she has 30 days to contest the debt, while at the same time telling her she has 20 days to respond to a lawsuit falls squarely within the Act’s prohibitions. In fact, if Clark County Collection Service commenced a lawsuit against the woman (assuming that they were truly the assignee of the debt), and did not send a letter, there would be no FDCPA violation.

    Unless the debt collector wanted to test the waters to see if buying an FDCPA lawsuit was legally viable, the debt collector should have cut their loses and settled the litigation up front by an offer of judgment. The risk of paying an estimated $300,000 attorney bill to the plaintiff, if defendant should lose, is not a good economic choice to collect an $800 debt.

  • I would expect that this practice would be found by a court to be against public policy. Of course, the case is in Nevada, so who knows.

    Mr. Poser wins Commenter Of the Year just for knowing what a Klein bottle is.

    • “A mathematician named Klein
      Thought the Möbius band was divine.
      Said he: ‘If you glue
      The edges of two,
      You’ll get a weird bottle like mine.'”

  • That probably turns on Nevada law. Generally, you can’t execute on a chose in action, because it’s intangible, and a writ of execution generally only allows seizure of things that, well, can be seized.

    The court might be able to order it turned over, though. But that would be, as someone already observed, rather inequitable.