N.D. Illinois: Debt Buyer Cannot Collect Interest if Implicitly Waived by Original Creditor’s Actions; Finds Debt Buyer is Subject to FDCPA

Gomez v. Cavalry Portfolio Services, LLC et al., Case No. 14-cv-9420 (N.D. Ill. Sept. 24, 2018) is a court decision full of questions but not much analysis on some key issues. The case involved the statute of limitations, whether a purchaser of defaulted debt is a debt collector subject to the Fair Debt Collection Practices Act (FDCPA), and what happens to a subsequent creditor's right to collect interest if the original creditor stopped doing so after charge off. The insideARM perspective below discusses some gaps in this decision.

Factual and Procedural Background

Plaintiffs incurred a credit card debt through FIA Card Services, a subsidiary of Bank of America (BOA). In accordance with its policies on charged off accounts, BOA stopped assessing interest on the account and stopped sending periodic statements to plaintiffs once it charged off the account. The cardholder agreement for this account, which plaintiffs agreed to when they opened the credit card, states that BOA’s failure to exercise any of its rights under the agreement does not constitute a waiver those rights in the future.

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