Suit Upending Law Firm Debt Collection

A federal judge has ruled that a law firm handling a debt collection could be held liable for damages, even if it didn’t know its clients were relying on incorrect information. The original case concerned a law firm attempting to collect a homeowner’s insurance debt from Steven Psaros, but it was discovered that Psaros did not owe the money under the terms of a mortgage refinance. Of the more than 30,000 complaints about debt collectors that the Consumer Financial Protection Bureau gathered in six months of 2013, frequent complaints concerned debt collectors coming after money that was not owing. The ruling could lead more law firms to be vigilant about checking into their clients’ claims.