Dunning Letters as to Time-Barred Debt Can Violate FDCPA - Mar 28 2014 - Legal Update

Sep 15, 2026

The Seventh Circuit ruled that collection dunning letters sent after the applicable statute of limitations expires violate the FDCPA unless they clearly disclose that the debt may be time-barred. Under 15 U.S.C. §§ 1692e and 1692f, letters that misrepresent the legal status of a debt—especially by offering settlements without disclosure—can mislead an “unsophisticated consumer.” The court favored the FTC’s approach, even without threats of litigation, adding risk when pursuing old debts.

LanguageEnglish

CategoryLetters

FormatPDF

Pages2

Reading Time1 min

AccessFree to download

Implications

FDCPA violation standard

Need for clear disclosure

Dunning Letters as to Time‐Barred Debt Can Violate FDCPA Mar 28 2014 Posted By: David I. Cisar Practice Area: Banking and Commercial Finance The United States Court of Appeals for the Seventh Circuit ﴾Wisconsin, Illinois, Indiana﴿ has recently ruled that collection or "dunning" letters sent after the expiration of the applicable statute of limitations violate the Fair Debt Collection Practices Act ﴾"FDCPA"﴿ unless they also disclose that the debt may be time‐barred. 15 U.S.C. § 1692e and § 1692f of the FDCPA prohibit debt collectors from making "any false, deceptive, or misleading representation or means in connection with the collection of any debt" ﴾which includes a false representation of the character, amount, or legal status of any debt﴿, and from using any "unfair or unconscionable means to collect or attempt to collect any debt." The dunning letters at issue in the consolidated appeals McMahon v. LVNV Funding, LLC and Delgado v. Capital Management Services were sent many years after the applicable statutes of limitations for the debts had expired, meaning that the recipients had an "ironclad" defense to collection. Neither letter disclosed this fact. Both letters contained offers to settle the debt at less than the full amount owed. In considering whether the letters violated the FDCPA, the Seventh Circuit faced competing interpretations of how the FDCPA's prohibition on false and misleading statements applies to the collection of time‐barred debts. The Third Circuit ﴾Delaware, New Jersey, Pennsylvania, Virgin Islands﴿ and Eighth Circuit ﴾Missouri, Arkansas, Iowa, Minnesota, North Dakota, South Dakota, Nebraska﴿ Courts of Appeal have both held that sending dunning letters for time‐barred debts does not violate the FDCPA unless the letter includes a threat of litigation. Conversely, government agencies including the Federal Trade Commission ﴾"FTC"﴿ assert that sending dunning letters for time‐barred debt could deceive a consumer because a﴿ most consumers do not understand that their rights or the defense to a lawsuit that is available to them if the debt is time‐barred, and b﴿ partial payment on a time‐barred debt may actually revive the entire debt in some states. The Seventh Circuit held that, for debt barred by the applicable statute of limitation, "if the debt collector uses language in its dunning letter that would mislead an unsophisticated consumer into believing that the debt is legally enforceable…the collector has violated the FDCPA" because such a letter misrepresents the status of the debt. To reach this conclusion, the Court utilized the "unsophisticated consumer" standard used in the Seventh Circuit with respect to claims made under § 1692e and § 1692f and favored the FTC's position with respect to the collection of time‐barred debts. Notably breaking from the Third and Eighth Circuits, the Court found that the letters violated the FDCPA despite the fact that neither of the letters at issue threatened litigation. Implications Collecting old debt is difficult; the longer the debt remains outstanding the less likely it is that it will be paid. This decision has added a new element of risk to collecting old debts – the greater possibility of an FDCPA violation if the dunning letter relates to time‐barred debt. The Seventh Circuit noted that it is not "automatically improper for a debt collector to seek repayment of time‐barred debts" because "some people might consider full debt re‐payment a moral obligation…." However, dunning letters that contain offers to settle time‐barred debt ﴾as did the letters here﴿ or that contain threats of litigation as to time‐ barred debt ﴾as in the Third and Eighth Circuit cases﴿ would mislead unsophisticated consumers as to the legal status of the debt and violate the FDCPA. Therefore, debt collectors and creditors need to be more careful in how they pursue collection of old debts. If there is any question as to whether the debt may be time‐ barred, the S

FAQs

What did the Seventh Circuit rule about time-barred debt dunning letters?

It held that dunning letters sent after the statute of limitations expires violate the FDCPA if the language could mislead an unsophisticated consumer into believing the debt is legally enforceable and the letter does not disclose that the debt may be time-barred.

Which FDCPA provisions were central to the decision?

The decision relied on 15 U.S.C. § 1692e and § 1692f, which prohibit false, deceptive, or misleading representations and unfair or unconscionable means of debt collection, including misrepresentations of a debt’s legal status.

Does the FDCPA require threats of litigation to be violated for time-barred debts in this case?

No. The Seventh Circuit found the letters violated the FDCPA even though neither letter threatened litigation, distinguishing the case from approaches taken by other circuits.

Sep 15, 2026

Uploaded by Emma Mercer