Is it misleading for a debt collector to tell a consumer categorically that her student loan debt is "NOT eligible" for discharge in bankruptcy? Yes, says the Second Circuit, in Easterling v. Collecto, Inc., decided today: although the debtor may face "several steep procedural and substantive hurdles" to such a discharge, she has the right to seek it and may in fact obtain it. Therefore the court characterized as "false on its face" a debt collector's form notice telling the FDCPA plaintiff here (and a group of almost 200 others) to pay up because discharge was unavailable.
The court elaborated:
We think that, upon reading the Collection Letter, the least sophisticated consumer might very well refrain from seeking the advice of counsel, who could then assist her in pursuing all available means of discharging her debt through bankruptcy. The Collection Letter’s capacity to discourage debtors from fully availing themselves of their legal rights renders its misrepresentation exactly the kind of “abusive debt collection practice[]” that the FDCPA was designed to target.
Bravo.
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