Wahl v. Midland Credit Management, Inc., No. 08-1517.

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Writing for the CourtEvans
Citation556 F.3d 643
PartiesBarbara WAHL, on behalf of herself and certain classes, Plaintiff-Appellant, v. MIDLAND CREDIT MANAGEMENT, INC., Midland Funding NCC-2 Corp., and Encore Capital Group Inc., formerly known as MCM Capital Group, Inc., Defendants-Appellees.
Docket NumberNo. 08-1517.
Decision Date23 February 2009
556 F.3d 643
Barbara WAHL, on behalf of herself and certain classes, Plaintiff-Appellant,
v.
MIDLAND CREDIT MANAGEMENT, INC., Midland Funding NCC-2 Corp., and Encore Capital Group Inc., formerly known as MCM Capital Group, Inc., Defendants-Appellees.
No. 08-1517.
United States Court of Appeals, Seventh Circuit.
Argued January 23, 2009.
Decided February 23, 2009.

Daniel A. Edelman, Attorney (argued), Edelman, Combs & Latturner, Chicago, IL, for Plaintiff-Appellant.

Richard E. Gottlieb, Attorney (argued), Dykema Gossett, Chicago, IL, for Defendants-Appellees.

Before BAUER, EVANS, and WILLIAMS, Circuit Judges.

EVANS, Circuit Judge.


Congress passed the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692, to curb abusive methods of debt collection. Central to this objective is the

556 F.3d 644

Act's requirement that debt collectors state only truthful information. Today we decide whether this requirement is violated when a collector, although accurately stating the amount demanded, breaks down the principal and interest components of the debt in an arguably false manner.

The facts are largely undisputed. During the 1980s and 1990s, Barbara Wahl racked up a small debt on a credit card issued by BP Amoco (BP). As of 1998, the outstanding balance was a mere $66.98, and Wahl was no longer using the card. Unfortunately, though, Wahl was out of work at the time due to a stroke she suffered three years earlier, which also left her with exorbitant medical expenses, so the bill went unpaid. And with interest and late fees accruing every month, it soon spiraled out of control. By 2002, the bill was nearly $1000. Statements from 2002 to 2005 showed that, although the card was not being used, nearly $40 in interest and late fees were accruing every month. In 2005, the debt finally went into collection, and that's where the defendants in this case—Midland Credit Managing, Inc., Midland Funding NCC-2 Corp., and Encore Capital Group, Inc. (collectively1 Midland)—became involved. Midland took title to the debt in January, purchasing the balance of $1149.09. Of course, the balance was comprised almost entirely of interest and late fees charged by BP, but that was a valid part of the money owed.

In early February 2005, Midland sent Wahl a letter demanding payment. Midland listed the "current balance" as $1,149.09 but offered Wahl a 25 percent discount if she payed within a month and a half (making the "amount due" only $861.82). Wahl didn't take the deal, but she has no beef with that letter. Instead, Wahl claims it was the next two letters that violated the FDCPA, because—ironically enough—they provided more information.

The next letter came on Tax Day, April 15, 2005.2 This time it was a two-sided document. The front side bore the same format as the previous letter but with higher figures. It listed both the "current balance" and "amount due" as $1,160.57. The back side, however, broke this sum down into its component parts, accounting for the increase since the previous letter. The "principal balance," or past due amount, was identified as $1,149.09. And the difference between that figure and the current amount due—$11.48—was attributed to "accrued interest," all leading to the "new balance" (called the "current balance" and "amount due" on the front side) of $1,160.57.

The final letter made its way to Wahl some four months later, in August 2005. It was drawn up in an identical format, but naturally Midland wanted more money. This time the "current balance" and "amount due" were $1,181.49, accounting for a total of $32.40 in "accrued interest" since Midland purchased the debt. As before, the interest was listed on the back side of the form, as was the "principal balance" of $1,149.09 and the "new balance" of $1,181.49.

At the risk of both repetition and stating the obvious, we emphasize that the amount designated as "principal balance" in both these letters ($1,149.09) included interest and late fees that accrued on the account under BP. In other words, the "principal balance" was what Wahl owed BP before BP transferred the account to Midland for collection.

556 F.3d 645

Against this backdrop, and with no inclination to pay, Wahl filed a putative class-action complaint in the Northern District of Illinois. Though she asserted two counts under the FDCPA, only one of them—we'll call it the "principal-and-interest" count—is before us on this appeal. Here it is in a nutshell: Debt collectors need not say anything more than the amount sought, but if they do elect to specify principal and interest components, they must indicate the principal charges levied by the original account holder, the interest levied by the original account holder, and the interest levied by the debt collector. Otherwise, Wahl claims, the statement is false—because "principal" cannot include any amount of interest. Wahl says the collection letters in...

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287 practice notes
  • Hart v. Pac. Rehab of Md., P.A., Civil Action No. ELH-12-2608
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • September 13, 2013
    ...F.3d 488, 495 (5th Cir. 2004). But, the least sophisticated debtor need not be "a dimwit." Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645 (7th Cir. 2009). Nor is the least sophisticated debtor a person "tied to the very last rung of the intelligence or sophistication l......
  • Johnson v. BAC Home Loans Servicing, LP, No. 5:10–CV–271–F.
    • United States
    • United States District Courts. 4th Circuit. Eastern District of North Carolina
    • September 29, 2011
    ...at *4 (E.D.N.C. March 1, 2010) (quoting Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir.2009)). See Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645 (7th Cir.2009) (concluding that the least sophisticated debtor “isn't a dimwit”).1. Consumer Debt Consumer debt is defined as an obligation t......
  • Grant–Hall v. Cavalry Portfolio Servs., LLC, No. 11 C 1832.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • February 24, 2012
    ...debt.” 15 U.S.C. § 1692e; see Ruth v. Triumph P'ships, 577 F.3d 790, 799–800 (7th Cir.2009) (quoting Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645–46 (7th Cir.2009)). The provision essentially is a “rule against trickery.” Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 480 ......
  • Johnson v. BAC Home Loans Servicing, LP, No. 5:10-CV-303-F
    • United States
    • United States District Courts. 4th Circuit. Eastern District of North Carolina
    • September 29, 2011
    ...at *4 (E.D.N.C. March 1, 2010) (quoting Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009)). See Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645 (7th Cir. 2009) (concluding that the least sophisticated debtor "isn't a dimwit").1. Consumer Debt Consumer debt is defined as an ......
  • Request a trial to view additional results
287 cases
  • Hart v. Pac. Rehab of Md., P.A., Civil Action No. ELH-12-2608
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • September 13, 2013
    ...F.3d 488, 495 (5th Cir. 2004). But, the least sophisticated debtor need not be "a dimwit." Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645 (7th Cir. 2009). Nor is the least sophisticated debtor a person "tied to the very last rung of the intelligence or sophistication l......
  • Johnson v. BAC Home Loans Servicing, LP, No. 5:10–CV–271–F.
    • United States
    • United States District Courts. 4th Circuit. Eastern District of North Carolina
    • September 29, 2011
    ...at *4 (E.D.N.C. March 1, 2010) (quoting Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir.2009)). See Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645 (7th Cir.2009) (concluding that the least sophisticated debtor “isn't a dimwit”).1. Consumer Debt Consumer debt is defined as an obligation t......
  • Grant–Hall v. Cavalry Portfolio Servs., LLC, No. 11 C 1832.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • February 24, 2012
    ...debt.” 15 U.S.C. § 1692e; see Ruth v. Triumph P'ships, 577 F.3d 790, 799–800 (7th Cir.2009) (quoting Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645–46 (7th Cir.2009)). The provision essentially is a “rule against trickery.” Beler v. Blatt, Hasenmiller, Leibsker & Moore, LLC, 480 ......
  • Johnson v. BAC Home Loans Servicing, LP, No. 5:10-CV-303-F
    • United States
    • United States District Courts. 4th Circuit. Eastern District of North Carolina
    • September 29, 2011
    ...at *4 (E.D.N.C. March 1, 2010) (quoting Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009)). See Wahl v. Midland Credit Mgmt., Inc., 556 F.3d 643, 645 (7th Cir. 2009) (concluding that the least sophisticated debtor "isn't a dimwit").1. Consumer Debt Consumer debt is defined as an ......
  • Request a trial to view additional results

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