Sixth Circuit reverses District Court and asks it to conduct a trial on whether the phrase “Settlement Offer” when used in connection with the collection of an out of statute debt is misleading under the Fair Debt Collection Practices Act.

The Fair Debt Collection Practices Act (“FDCPA”) protects the “least sophisticated consumer” (“LSC”).  The LSC is a hypothetical person with a minimal amount of intelligence.  The FDCPA protects this person.

Recently, the Sixth Circuit Court of Appeals had an opportunity to examine the question of whether the word “settlement” expressed in a demand letter related to an out of statute debt, would confuse the LSC into believing that the debt was enforceable.

In Buchanan v. Northland Group, Inc., No. 13-2523 (6th Cir. Jan. 13, 2015), Esther Buchanan received a “settlement offer” from Northland Group, which had been assigned Buchanan’s $4,768.43 debt by LVNV Funding, LLC. The letter stated, “The current creditor is willing to reduce your balance by offering you a settlement. We are not obligated to renew this letter. Upon receipt and clearance of $1,668.96, your account will be satisfied and closed and a settlement letter will be issued.  The debt, as noted above, was unenforceable as the statute had run.  Buchanan filed a class action against Northland group alleging that the use of the word “settlement” carried with it, the implication that the debt was still enforceable.  The United States District Court for the Western District of Michigan granted the Defendant’s Motion to Dismiss.  The Sixth Circuit reversed.

The Sixth Circuit held that the term “Settlement” used in connection with an unenforceable debt may be misleading in violation if the FDCPA at 15 U.S.C. 1692e.   Hence, this should be heard by a jury as it’s a question of fact that should not be decided on summary judgment.  It’s interesting to note that the Plaintiff hired a professor of psychology to give expert testimony on this very issue.  Again, a jury should hear what the professor has to say on this issue.

In this case, judges and juries in the Western District of Michigan are notoriously conservative.  They may likely find that the phrase “settlement offer” is not misleading when used I connection with an out of statute debt.  But, we have to wait and see.

If you have been victimized by a debt collector or have items on your credit report that are incorrect, call or email Attorney Gary Nitzkin at for a free consultation at (888) 293-2882. For more information about your credit rights as a consumer, visit our website at for informative how to videos on consumer financial protection. We are here to fight for you. Call us today! 888-293-2882.

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