• DYE CULIK PC | Consumer Protection Division

Supreme Court to Decide Whether Foreclosure is “Debt Collection” Subject to FDCPA

Is foreclosure debt collection? Foreclosing on someone’s home for failure to pay their mortgage may seem like just one more way for creditors to obtain money owed to them. Courts, however, disagree about whether foreclosure constitutes “debt collection” under the federal Fair Debt Collection Practices Act (FDCPA). The issue will soon be resolved once and for all — the Supreme Court has just granted a petition asking that it decide the issue.

The Supreme Court might decide whether the FDCPA applies to non-judicial foreclosures, or to judicial foreclosures, too. Non-judicial foreclosure is the type of foreclosure used in Massachusetts, and the bank or lender is not required to go to court prior to foreclosing. With judicial foreclosure, the lender must go to court.


The FDCPA covers “debt collection,” which is defined as attempting to collect on a consumer’s obligation to pay money. Debt collectors argue that foreclosure is not debt collection because they are merely foreclosing, not actually collecting money. On the other hand, consumer advocates argue that the point of a foreclosure is to obtain payment on a the loan, which is a debt, and thus foreclosure should qualify as debt collection under the FDCPA.

Congress passed the Fair Debt Collection Practices Act (FDCPA) to “eliminate abusive debt collection practices by debt collectors.” 15 U.S.C. 1692(e). Under the FDCPA, the term “debt collector” is defined as “any person * * * who regularly collects or attempts to collect, directly or indirectly, debts owed or due * * * another.” 15 U.S.C. 1692a(6).

This case presents a clear and entrenched conflict regarding whether the FDCPA applies in the foreclosure context. In the decision below, the Tenth Circuit, siding with the Ninth Circuit, held that non-judicial foreclosures are not covered by the FDCPA; in doing so, the panel acknowledged the issue has “divided the circuits,” and it expressly rejected the “contrary position” of multiple courts of appeals and state high courts. This holding was the sole basis of the decision below, and it arises on the precise fact-pattern that has generated extensive “confusion” and hundreds of conflicting decisions. This case is the perfect vehicle for resolving the widespread disagreement over this important issue.

The question presented is: Whether the FDCPA applies to non-judicial foreclosure proceedings.

The petition is here: Petition for a Writ of Certiorari Regarding FDCPA

Though the Supreme Court probably will not decide this issue for months, the decision will be of vital importance to homeowners. If the Supreme Court decides foreclosure is not debt collection, then a large loophole will be created in which consumers have no protection from debt collectors at a time when they are most vulnerable.

Culik Law represents homeowners in Massachusetts facing foreclosure. We file lawsuits against mortgage lenders and servicers, negotiate loan modifications and workouts, and fight back against debt collectors and other businesses who engage in unfair or deceptive practices. If you feel your rights may have been violated, contact us for a case evaluation.

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