Indiana Federal Court Dismisses FDCPA Suit Alleging that Law Firm and Attorney Engaged in Unlicensed Debt Collection

An Indiana federal court recently dismissed a lawsuit against a law firm and its attorney alleging that they violated the FDCPA and Indiana statute by acting as unlicensed debt collectors.

The conduct at issue in the present case arose out of an earlier lawsuit in which the defendant–law firm, on behalf of its lender-client, filed a lawsuit in Indiana state court against the current plaintiff-borrower.  The earlier lawsuit sought to repossess the borrower’s vehicle and recover the remaining amount due on the accompanying loan after the borrower had defaulted.  The borrower claimed that the law firm and attorney, by filing suit over the vehicle loan, violated an Indiana licensing statute because they acted as debt collectors without being licensed by the appropriate state agency.  In turn, the borrower claimed that this state statutory violation constituted a violation of the federal FDCPA.

The court disagreed.  As the court observed, the Indiana debt collector licensing statute does not explicitly provide for a private right of action.  And in the court’s view, a private right of action could not be implied from the statutory scheme.  Thus, the court concluded that the borrower could not sue directly under the Indiana statute.

Relying on a prior Indiana federal district court order concluding the same, the court also rejected the borrower’s separate argument that an FDCPA violation could be predicated on a violation of a state licensing law.  Finally, the court rejected the borrower’s argument that the law firm and attorney violated the FDCPA by trying to collect an uncollectable debt.