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Some debts may be excluded from FDCPA protection

Virginians who file for bankruptcy in order to get their debts excused may not always be able to leverage consumer protection laws the way they may expect. In one case, the Ninth Circuit Court decided to dismiss a borrower's lawsuit against one of her foreclosure trustees over what she believed was a violation of her rights under the FDCPA, which stands for the Fair Debt Collection Practices Act.

The Ninth Circuit court's decision revolved around its interpretation of the relationship between the borrower and the trustee. Since the judges decided that the trustee wasn't demanding payment when it sent notices of sale and default, it was excused from certain FCDPA requirements.

In this case, the trustee's decision to mail notices to the borrower was in compliance with state requirements, so the court decided that holding the trustee to FDCPA rules might constitute an untenable burden. The chief judge also noted the difference between sending a notice to prompt someone to make a payment and taking action to collect outstanding funds. As such, the plaintiff's assertion that the notices misrepresented the amount that she owed on her mortgage became a moot point.

Bankruptcy has the potential help people gain financial relief from overwhelming debt. It's not a universal cure-all, however, so each debtor needs to come up with a workable plan. Those seeking protection might find it necessary to structure their filings and assets in specific ways in order to maximize their benefits in the long run. Courts and judges may have varied opinions regarding who is eligible for a certain type of protection, so it may be helpful for someone considering filing for bankruptcy to review his or her plans with an attorney before doing so.

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