In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 15‐1567
MANUEL PANTOJA,
Plaintiff‐Appellee,
v.
PORTFOLIO RECOVERY ASSOCIATES, LLC,
Defendant‐Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:13‐cv‐07667 — Robert W. Gettleman, Judge.
____________________
ARGUED DECEMBER 11, 2015 — DECIDED MARCH 29, 2017
____________________
Before KANNE, ROVNER, and HAMILTON, Circuit Judges.
HAMILTON, Circuit Judge. Back in 1993, according to de‐
fendant Portfolio Recovery Associates, plaintiff Manuel Pan‐
toja incurred a debt for a Capital One credit card that he ap‐
plied for but never actually used. Twenty years later, long af‐
ter the statute of limitations had run, Portfolio Recovery had
bought Capital One’s rights to this old debt and sent Pantoja
a dunning letter trying to collect. The federal Fair Debt Col‐
2 No. 15‐1567
lection Practices Act (“FDCPA”) prohibits collectors of con‐
sumer debts from, among other things, using “any false, de‐
ceptive, or misleading representation or means in connection
with the collection of any debt.” 15 U.S.C. § 1692e. This appeal
concerns the practice of attempting to collect an old consumer
debt that is clearly unenforceable under the applicable statute
of limitations.
The district court granted summary judgment in favor of
plaintiff Pantoja on his claim under § 1692e. The court found
the dunning letter was deceptive or misleading because (a) it
did not tell the consumer that the defendant could not sue on
this time‐barred debt and (b) it did not tell the consumer that
if he made, or even just agreed to make, a partial payment on
the debt, he could restart the clock on the long‐expired statute
of limitations, in effect bringing a long‐dead debt back to life.
Pantoja v. Portfolio Recovery Assocs., LLC, 78 F. Supp. 3d 743
(N.D. Ill. 2015). We affirm, essentially for the reasons ex‐
plained concisely by Judge Gettleman.
I. Factual and Procedural Background
We review de novo a grant of summary judgment, consid‐
ering facts that are not disputed and giving the non‐moving
party the benefit of conflicts in the evidence and reasonable
inferences that might be drawn from the evidence. Ruth v. Tri‐
umph P’ships, 577 F.3d 790, 794 (7th Cir. 2009), quoting Belcher
v. Norton, 497 F.3d 742, 747 (7th Cir. 2007). In 1993, plaintiff
Manuel Pantoja applied for a credit card from Capital One
Bank. He was approved for the credit card, but he never acti‐
vated the account or used the card for any purpose. Neverthe‐
less, Capital One assessed annual fees, late fees, and activa‐
tion fees against Pantoja’s account. Not surprisingly, he never
No. 15‐1567 3
made any payment on the account. Defendant Portfolio Re‐
covery Associates purchased a portfolio of consumer debts in‐
cluding the debt allegedly owed by Pantoja. In 1998, Portfolio
Recovery attempted to collect the alleged debt by telephone
calls but apparently stopped in fairly short order without suc‐
cess. Nothing more happened with the account until April
2013, when Portfolio Recovery sent a dunning letter to Pantoja
claiming he owed $1,903.15. The letter said:
We are offering to settle this account FOR
GOOD! Life happens and at times you may fall
behind on your commitments. We understand
and are offering you the opportunity to lock in
this settlement offer with a low down payment
of $60.00. If settling this account with the op‐
tions that we are offering is difficult for you,
give us a call.
Other payment options may be available so
please call 1‐800‐772‐1413 for more infor‐
mation.
Please understand, we can’t help you resolve
this debt if you don’t call, our friendly repre‐
sentatives are waiting. Because of the age of
your debt, we will not sue you for it and we will
not report it to any credit reporting agency.
The letter also proposed three “settlement offers” to choose
among. The first called for a “down payment” of $60.00 and
payment of an additional $511.00 within a month, with the
claim that this would “save” Pantoja $1,332.15. The second
option called for a down payment of $45.00 and six monthly
payments of $104.00 each, to “save” Pantoja $1,234.15. The
4 No. 15‐1567
third option called for a down payment of $40.00 and twelve
monthly payments of $60.00, to “save” Pantoja $1,143.15. The
offers added: “Once the full settlement payment is received
your account will be considered settled in full.” The second
page of the letter cautioned: “We are not obligated to renew
this offer.” See Evory v. RJM Acquisitions Funding L.L.C., 505
F.3d 769, 776 (7th Cir. 2007) (stating that this sentence, word‐
for‐word, would protect consumers from false impressions
concerning collectors’ supposedly “one‐time” settlement of‐
fers).
Our principal focus is on the following language in the
dunning letter: “Because of the age of your debt, we will not
sue you for it and we will not report it to any credit reporting
agency.” The parties filed cross‐motions for summary judg‐
ment. Portfolio Recovery pointed out that the dunning letter
said the debt was so old that it would not sue the debtor, and
it argued that the letter was at worst ambiguous as to whether
it could have sued to collect the debt.
As noted, the district court granted summary judgment
for Pantoja on his claim under the FDCPA. The court offered
two independent reasons, and we agree with both. The first is
that the dunning letter failed to warn Pantoja that if he ac‐
cepted any of the settlement offers, whether by making a par‐
tial payment or even by just agreeing to make a payment, he
would lose the protection of the statute of limitations. The sec‐
ond is that the letter deceptively said that Portfolio Recovery
had chosen not to sue Pantoja, rather than saying that the debt
was so old that Portfolio Recovery could not sue him for the
alleged debt. The court entered a final judgment in favor of
No. 15‐1567 5
Pantoja for statutory damages of $1,000 but deferred until af‐
ter this appeal any action on Pantoja’s claim for attorney fees
under 15 U.S.C. § 1692k(a)(3).1
II. Analysis
The purposes of the FDCPA are “to eliminate abusive debt
collection practices by debt collectors, to insure that those
debt collectors who refrain from using abusive debt collection
practices are not competitively disadvantaged, and to pro‐
mote consistent State action to protect consumers against debt
collection abuses.” 15 U.S.C. § 1692(e). To accomplish those
purposes, the Act provides in sweeping terms: “A debt collec‐
tor may not use any false, deceptive, or misleading represen‐
tation or means in connection with the collection of any debt.”
15 U.S.C. § 1692e. The question is how that language applies
to the dunning letter here, which attempted to collect a debt
barred by the applicable statute of limitations.
We start with law that we believe is settled. First, a debt
collector violates the Act by suing to collect a consumer debt
after the statute of limitations has run and bars the suit. Phil‐
lips v. Asset Acceptance, LLC, 736 F.3d 1076, 1079 (7th Cir. 2013),
collecting cases, including Kimber v. Federal Financial Corp., 668
F. Supp. 1480, 1488 (M.D. Ala. 1987); Huertas v. Galaxy Asset
Mgmt., 641 F.3d 28, 32–33 (3d Cir. 2011); Harvey v. Great Seneca
Fin. Corp., 453 F.3d 324, 332–33 (6th Cir. 2006).
Second, a debt collector also violates the Act by threaten‐
ing to sue to collect such a debt. See 15 U.S.C. § 1692e(5) (out‐
lawing a “threat to take any action that cannot legally be taken
1 The court also granted summary judgment to Portfolio Recovery on
a state‐law claim that is no longer at issue in the case. Pantoja, 78 F. Supp.
3d at 747.
6 No. 15‐1567
or that is not intended to be taken”); McMahon v. LVNV Fund‐
ing, LLC, 744 F.3d 1010, 1021 (7th Cir. 2014) (“The plain lan‐
guage of the FDCPA prohibits … threatening to take actions
that the collector cannot take.”); Huertas, 641 F.3d at 33 (plain‐
tiffʹs FDCPA claim regarding attempt to collect a time‐barred
debt “hinges on whether [the dunning] letter threatened liti‐
gation”); Freyermuth v. Credit Bureau Services, Inc., 248 F.3d
767, 771 (8th Cir. 2001) (“[I]n the absence of a threat of litiga‐
tion or actual litigation, no violation of the FDCPA has oc‐
curred when a debt collector attempts to collect on a poten‐
tially time‐barred debt that is otherwise valid.”); Parkis v. Ar‐
row Financial, 2008 WL 94798, at *7 (N.D. Ill. Jan. 8, 2008);
Walker v. Cash Flow Consultants, Inc., 200 F.R.D. 613, 616 (N.D.
Ill. 2001); Beattie v. D.M. Collections, Inc., 754 F. Supp. 383, 393
(D. Del. 1991).
The point of controversy here concerns efforts to collect
consumer debts on which the statute of limitations has ex‐
pired when the effort does not involve filing or threatening a
lawsuit. Compare McMahon, 744 F.3d at 1020 (dunning letters
offering to “settle” time‐barred debts could violate Act by
leading debtors to believe the debts were legally enforceable);
Daugherty v. Convergent Outsourcing, Inc., 836 F.3d 507, 509
(5th Cir. 2016) (effort to collect is not automatically unlawful,
but letter violates FDCPA if it could lead unsophisticated con‐
sumer to believe her time‐barred debt is legally enforceable);
and Buchanan v. Northland Group, Inc., 776 F.3d 393, 397 (6th
Cir. 2015) (reversing dismissal on pleadings; offer to settle
time‐barred debt could violate Act by failing to disclose that
suit would be time‐barred or that partial payment would re‐
move statute of limitations bar), with Huertas, 641 F.3d at 33
No. 15‐1567 7
(holding that attempt to collect a time‐barred debt was per‐
missible if litigation not threatened), and Freyermuth, 248 F.3d
at 771 (same).
Even without an express threat of litigation, such collec‐
tion efforts offer opportunities for mischief and deception, as
we explain below. We recognize that most states (though not
Wisconsin, in this circuit) treat a debt as a debt even after the
statute of limitations has run so that it cannot be legally en‐
forced, at least if the defendant appears and asserts the affirm‐
ative defense. See, e.g., Buchanan, 776 F.3d at 396–97 (recog‐
nizing general rule); cf. Wis. Stat. § 893.05 (when statute of
limitations expires, “the right is extinguished as well as the
remedy”). The creditor retains the legal right to appeal to the
debtor to honor the debt out of a sense of moral obligation
even if the legal obligation can no longer be enforced in court.
Nevertheless, the opportunities for mischief and deception,
particularly when sophisticated parties aim carefully crafted
messages at unsophisticated consumers, may well be so great
that the better approach is simply to find that any such efforts
violate the FDCPA’s prohibitions on deceptive or misleading
means to collect debts, § 1692e, and on “unfair or unconscion‐
able means” to attempt to collect debts, § 1692f.
The plaintiff does not argue for that broad rule here, how‐
ever, and we can decide this case on narrower grounds. We
agree with the district court’s two reasons for finding that the
dunning letter here was deceptive. First, the letter does not
even hint, let alone make clear to the recipient, that if he
makes a partial payment or even just a promise to make a par‐
tial payment, he risks loss of the otherwise ironclad protection
of the statute of limitations. Second, the letter did not make
clear to the recipient that the law prohibits the collector from
8 No. 15‐1567
suing to collect this old debt. Either is sufficient reason to af‐
firm summary judgment for the plaintiff.
A. The Danger of Resetting the Statute of Limitations
We begin with the danger that a debtor who accepts the
offered terms of settlement will, by doing so, waive his other‐
wise absolute defense under the statute of limitations. Only
the rarest consumer‐debtor will recognize this danger. See,
e.g., Buchanan, 776 F.3d at 399; McMahon, 744 F.3d at 1021;
Pantoja, 78 F. Supp. 3d at 746; Debt Collection, 78 Fed. Reg.
67,848, 67,876 (Nov. 12, 2013) (advance notice of proposed
rulemaking by Consumer Financial Protection Bureau).
This danger is present under Illinois law, which governs
the underlying debt here. The statute of limitations for written
contracts and debts is ten years. The statute provides further:
“if any payment or new promise to pay has been made, in
writing … within or after the period of 10 years, then an action
may be commenced thereon at any time within 10 years after
the time of such payment or promise to pay.” 735 ILCS 5/13‐
206. That is, a new payment or written promise to pay starts a
new ten‐year clock.
The applicable statute of limitations could also be the five‐
year limit of 735 ILCS 5/13‐205, which seems to apply if the
plaintiff‐debt collector does not have written proof of the
debt. See Herkert v. MRC Receivables Corp., 655 F. Supp. 2d 870,
878 (N.D. Ill. 2009), citing Parkis, 2008 WL 94798, at *5; Ramirez
v. Palisades Collection, LLC, 2008 WL 2512679, at *3–*4 (N.D. Ill.
2008).2 Illinois courts hold that a new promise to pay will also
2 We would expect a debt collector to know whether it has written
proof of the debt, and thus which statute would apply, before it attempts
to collect the debt.
No. 15‐1567 9
start a new five‐year clock under this statute. See, e.g., Abdill
v. Abdill, 126 N.E. 543, 544 (Ill. 1920); Schmidt v. Desser, 401
N.E.2d 1299 (Ill. App. 1980) (requiring unambiguous written
promise to restart clock); Ross v. St. Clair Foundry Corp. 271 Ill.
App. 271, 273 (1933).
On this point, case law allows some room for disagree‐
ment about the precise scope of Illinois law, such as which
statute applies, whether the new promise to pay must be ex‐
plicit or may be implied, and whether the new promise to pay
must be in writing. Portfolio Recovery also points out that the
most relevant precedents are relatively old. None of those
points save this letter from being deceptive.
Whatever the precise scope of the Illinois law on restarting
the statute of limitations clock with a partial payment or new
promise to pay, either step would have put Pantoja in a much
worse legal position than he would have been in before taking
the step. Before he received defendant’s letter, he had an ab‐
solute defense to any possible collection suit, which would
have been illegal to file. If he had made or promised to make
a partial payment, he could have been sued, likely as a pro se
defendant, in a new suit. In such a suit, at best, he would have
had to challenge the collector’s reliance on these Illinois stat‐
utes and case law that would have given the collector substan‐
tial support. Silence about that significant risk of losing the
protection of the statute of limitations renders Portfolio Re‐
covery’s dunning letter misleading and deceptive as a matter
of law.
To avoid this result, Portfolio Recovery points to the open‐
ing language in its letter: “We are offering to settle this ac‐
count FOR GOOD!”, and the language close to the settlement
10 No. 15‐1567
offers: “Once the full settlement payment is received your ac‐
count will be considered settled in full.” Portfolio Recovery
argues that these assurances show there was no danger of de‐
ception here because an unsophisticated consumer would
have understood that his debt would have been extinguished
if he had accepted its offer.
That argument misses the point. We assume that if the
debtor actually accepted the offer and made all payments re‐
quired for the settlement, without missing one or being late
once, the defendant could not have tried to revive the under‐
lying debt for the full amount. But that’s not the relevant dan‐
ger. The point is that an unsophisticated consumer debtor
who makes the first payment or who promises to make a par‐
tial payment is much worse off than he would have been
without taking either step. If he then fails or refuses to pay
further, he will face a potential lawsuit. For purposes of this
appeal, it does not matter whether a failure to make further
payments would revive the original amount of the debt or just
the smaller amount of the settlement offer. Either way, the
debtor will be much worse off.
We assume that a few consumer debtors, even if they
know the debt can never be collected in a lawsuit, might
choose to pay an asserted debt based on a sense of moral ob‐
ligation. But we believe the FDCPA prohibits a debt collector
from luring debtors away from the shelter of the statute of
limitations without providing an unambiguous warning that
an unsophisticated consumer would understand. We will not
attempt to prescribe exact language for debt collectors to use
when writing such letters, but the language would need to be
clear, accessible, and unambiguous to the unsophisticated
consumer. Summary judgment for plaintiff was appropriate
No. 15‐1567 11
here because this letter provided no indication of the relevant
danger.
B. We Choose Not to Sue You, or We Cannot Sue You?
The second reason we agree with the district court that
Portfolio Recovery’s letter is deceptive and misleading is that
it gives the impression that Portfolio Recovery has only cho‐
sen not to sue, not that it is legally barred from doing so. De‐
fendant points out, though, that its letter to Pantoja does not
threaten a lawsuit, and it even says that Portfolio Recovery
“will not sue you for it.”
As the district noted, this carefully worded sentence was
taken from a 2012 consent decree between the Federal Trade
Commission and another debt collector. Where that other col‐
lector knew the statute of limitations had expired, the decree
required collection letters to say: “The law limits how long
you can be sued on a debt. Because of the age of your debt,
we will not sue you for it.” McMahon v. LVNV Funding, LLC,
2012 WL 2597933, at *2 (N.D. Ill. July 5, 2012), rev’d on other
grounds, 744 F.3d 1010 (7th Cir. 2014); see also 78 Fed. Reg. at
67,876 n.240 (quoting consent decree). As the district court
also noted, Portfolio Recovery omitted the first sentence from
the consent decree about the law limiting how long you can
be sued for a debt. It opted instead to include only the vaguer
“Because of the age of your debt we will not sue you for it ….”
The reader is left to wonder whether Portfolio has chosen to
go easy on this old debt out of the goodness of its heart, or
perhaps because it might be difficult to prove the debt, or per‐
haps for some other reason.
The district court wrote: “Upon receipt of the letter the
only reasonable conclusion that an unsophisticated consumer
12 No. 15‐1567
(or any consumer) could reach is that defendant was seeking
to collect on a legally enforceable debt, even if defendant in‐
dicated that it chose not to sue.” 78 F. Supp. 3d at 746. Portfo‐
lio Recovery argues that its letter’s language is ambiguous, so
that summary judgment was improper and so that the plain‐
tiff should have been required to come forward with a con‐
sumer survey or some other convincing evidence that con‐
sumers would actually understand the language as the dis‐
trict court did.
When handling FDCPA cases, we use the legal concept of
the unsophisticated consumer to gauge the actions of debt col‐
lectors. The unsophisticated consumer is “uninformed, naïve,
and trusting, but possesses rudimentary knowledge about the
financial world, is wise enough to read collection notices with
added care, possesses ‘reasonable intelligence,’ and is capable
of making basic logical deductions and inferences.” Williams
v. OSI Educ. Servs., Inc., 505 F.3d 675, 678 (7th Cir. 2007) (inter‐
nal quotations and alterations removed). Applying this stand‐
ard, the issue is whether the dunning letter “could well con‐
fuse a substantial number of recipients.” Id., quoting Taylor v.
Cavalry Inv., LLC, 365 F.3d 572, 575 (7th Cir. 2004).
When assessing whether a dunning letter violates the
FDCPA, whether an unsophisticated consumer would find
certain debt‐collection language misleading is often a ques‐
tion of fact. Lox v. CDA, Ltd., 689 F.3d 818, 822 (7th Cir. 2012),
citing Walker v. Nat’l Recovery, Inc., 200 F.3d 500, 503 (7th Cir.
1999); Evory, 505 F.3d at 776. We have further explained:
As an outgrowth of this practice, we have deter‐
mined that there are three categories of § 1692e
cases. The first category includes cases in which
the allegedly offensive language is plainly and
No. 15‐1567 13
clearly not misleading. In cases of this nature,
no extrinsic evidence is needed to show that the
reasonable unsophisticated consumer would
not be confused by the pertinent language. The
second category of cases includes debt collec‐
tion language that is not misleading or confus‐
ing on its face, but has the potential to be mis‐
leading to the unsophisticated consumer. If a
case falls into this category, we have held that
plaintiffs may prevail only by producing extrin‐
sic evidence, such as consumer surveys, to
prove that unsophisticated consumers do in fact
find the challenged statements misleading or
deceptive. The final category includes cases in‐
volving letters that are plainly deceptive or mis‐
leading, and therefore do not require any extrin‐
sic evidence in order for the plaintiff to be suc‐
cessful.
Lox, 689 F.3d at 822, quoting Ruth, 577 F.3d at 800 (internal
citations omitted). Where the FDCPA requires clarity, how‐
ever, ambiguity itself can prove a violation. E.g., Janetos v. Ful‐
ton Friedman & Gullace, LLP, 825 F.3d 317, 323 (7th Cir. 2016),
citing Chuway v. National Action Fin. Servs., Inc., 362 F.3d 944,
947–48 (7th Cir. 2004).
We are not sure that the only reasonable way to read de‐
fendant’s letter is the district court’s reading, that the letter
would confuse all unsophisticated consumers, but we are con‐
fident that it is one reasonable way to read it. Closer to the
heart of the issue, this letter is an example of careful and de‐
liberate ambiguity. (Recall how it adopts part of the language
14 No. 15‐1567
from another debt collector’s consent decree.) The very ambi‐
guity that Portfolio Recovery claims should save it from sum‐
mary judgment convinces us that summary judgment was ap‐
propriate. The carefully crafted language, chosen to obscure
from the debtor that the law prohibits the collector from suing
to collect this debt or even from threatening to do so, is the
sort of misleading tactic the FDCPA prohibits. The only rea‐
son to use such carefully ambiguous language is the expecta‐
tion that at least some unsophisticated debtors will misunder‐
stand and will choose to pay on the ancient, time‐barred debts
because they fear the consequences of not doing so.
The judgment of the district court is AFFIRMED.