N.D. Illinois: “Competent Attorney” Standard Applies to Letter Sent to Consumer’s Attorney Even if Debt Discharged in Bankruptcy

In a recent case, Grajny v. Credit Control, LLC, No. 18-CV-2719 (N.D. Ill. Oct. 9, 2018), the Northern District of Illinois reviewed the standard of review that applies to communications with the plaintiff’s attorney. Following Seventh Circuit precedent, the court repeated that communications directly with a debtor’s attorney fall under the “competent attorney” standard -- not the “unsophisctated consumer” standard.

Factual and Procedural Background

At some point, plaintiff incurred a debt that was discharged in bankruptcy. After the debt was discharged, Credit Control, LLC sent a collection letter directly to the consumer’s attorney, Alicja Sroka. Credit Control addressed the letter to plaintiff “[care of] Alicja Srok[a] Law Srok[a].” Ms. Sroka was also the attorney that represented plaintiff in the bankruptcy action that discharged this debt.

Plaintiff filed a lawsuit alleging that Credit Control violated the Fair Debt Collection Practices Act (FDCPA) by attempting to collect a debt using false representations or deceptive means since the debt was already discharged at the time the collection efforts were made. Credit Control filed a motion to dismiss.

The Decision

When reviewing the motion to dismiss, the court needed to examine whether the complaint stated a claim upon which relief can be granted. Citing Seventh Circuit precedent, the court stated that in this jurisdiction, communications directly with the consumer's attorney are reviewed under the “competent attorney” standard. Here, the relevant collection letter was sent directly to the attorney that represented the plaintiff in the bankruptcy action, who would have or should have known that the debt was discharged. The court found that a competent attorney in this circumstance would not be deceived or mislead by the letter.

One of the cases cited by the court in reaching its decision was Bravo v. Midland Credit Mgmt., Inc., 812 F.3d 559 (7th Cir. 2016), a case previously reported by insideARM. In Bravo, the underlying debt was settled between the parties. Here, plaintiff attempts to argue that Bravo shouldn't apply since the debt here was discharged in bankruptcy, not settled pursuant to an agreement between the debt collector and consumer. The court was unswayed by this, finding that “[t]he way a debt is resolved...is irrelevant; instead, the issue is whether a competent attorney would be deceived by Defendant’s collection letter.”

The court granted the motion to dismiss without prejudice, allowing the plaintiff to repleade the FDCPA claim.

insideARM Perspective

In an ideal world, this type of situation is avoided by procedures that check whether the account was discharged in bankruptcy. Unfortunately, scrubs are not perfect one hundred percent of  the time so it is foreseeable that a situation like the one above could occur. We don't know exactly what happened in this case since the decision focuses solely on the standard of review, but what's interesting is that a small change in facts could completely change the outcome. This case is an example where, in these circumstances, no harm befell the consumer since the letter went directly to the attorney that represented the consumer in the bankruptcy action that discharged the debt. Undoubtedly, had the letter gone to the consumer the motion to dismiss would have been denied. Who knows what the outcome would be if the letter had gone to another attorney representing the consumer, but not the one that represented the consumer in the underlying bankruptcy.