U.S. Supreme Court Holds that Law Firms Performing Nonjudicial Foreclosures are Not Debt Collectors

Today, in a unanimous decision, the U.S. Supreme Court found that law firms performing nonjudicial foreclosures are not debt collectors under the Fair Debt Collection Practices Act (FDCPA). The Supreme Court's decision in Obduskey v. McCarthy & Holthus LLP, No. 17-1307 (Mar. 20 2019) can be found here.

The court found that while McCarthy & Holthus LLP is subject to the FDCPA’s provisions specifically related to enforcing a security interest, it is not subject to the remaining provisions of the statute since it does not fall within the scope of the primary definition of “debt collector.”

Most persuasive to the court was the text of the FDCPA itself, which provides a limited purpose definition as it relates to enforcing security interests. The statute states that “for the purpose of section 1692f(6),” the term debt collector “also includes” [emphasis added] those enforcing security interests. The court was satisfied that using the term “also” means that entities that enforce security interests do not fall into the primary definition of debt collector.

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