Law firms solely conducting public trustee foreclosures not “debt collectors” under FDCPA 16:43, April 2, 2019

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Law firms solely conducting public trustee foreclosures not “debt collectors” under FDCPA

On March 20, 2019, the United States Supreme Court held in Obduskey v. McCarthy & Holthus LLP, 586 U.S. —- (2019) (case no. 17-1307) that a law firm only conducting a non-judicial (i.e., public trustee) foreclosure is not a “debt collector” under the Fair Debt Collection Practice Act (the “Act”). However, such proceedings do fall under Section 1692f(6) of the Act because such proceedings are the enforcement of a security interest. This case arises out of a public trustee foreclosure in Colorado. Section 1692f(6) prohibits the holder of security interest from taking any non-judicial action if there is no present right to possession or intent to take possession or if the property is exempt by law. In a unanimous opinion written by Justice Breyer, the Supreme Court held 9-0 that only Section 1692f(6) of the Act applies to non-judicial foreclosures because of the limited-purpose definition of “debt collector” set forth in that section of the Act. The Supreme Court reasoned that Congress may have chosen to treat non-judicial foreclosures differently to avoid conflicts with state laws and because of the legislative history of the Act. Law firms conducting non-judicial foreclosures or the lenders whose lien is being foreclosed should be mindful that this holding does not sanction any abusive debt collection practices and is limited solely to law firms that simply follow state statutes for non-judicial foreclosures. The Supreme Court also concluded that obtaining a court order authorizing the foreclosure sale (which is required in Colorado even for non-judicial foreclosures) does not convert the public trustee proceedings to a judicial foreclosure, which would be subject to the entire Act.

Garfield & Hecht, P.C. attorneys represent local, regional, and national lenders in loan transactions of all kinds as well as enforcement remedies including public trustee or judicial foreclosures and civil litigation involving deficiencies and personal guaranties. For more information, contact Ronald Garfield (, 970-925-1935, ext. 200) or Christopher D. Bryan (, 970-925-1936, ext. 802) in our Aspen office or David H. McConaughy (, 970-925-1936, ext. 810) in our Glenwood Springs offce or Kursten Canada (, 970-925-1936, ext. 853) in our Avon office or visit our website at