## Facts

- Kevin Miller obtained a mortgage loan to purchase and live in a home.
- Miller later moved out and rented the property to others.
- A law firm acting for the mortgagee sent Miller an initial collection (“dunning”) letter seeking payment on the mortgage.
- Miller sued under the Fair Debt Collection Practices Act (FDCPA), alleging the letter violated 15 U.S.C. § 1692g(a)(1) by failing to state “the amount of the debt.”
- The letter listed a balance but qualified it with language suggesting the balance could change due to interest, fees, or other charges, without clearly stating what was owed as of a particular date or how to obtain an exact payoff figure.
- The district court granted summary judgment for the defendants on the ground that, because the property was being rented at the time of collection, the obligation was a business debt outside the FDCPA.

## Issues

1. For FDCPA coverage, is an obligation’s character as a consumer debt determined when the debt is incurred or when collection occurs?
2. Did the collection letter satisfy 15 U.S.C. § 1692g(a)(1) by stating “the amount of the debt” where the balance could change over time?
3. What disclosure approach can debt collectors use to comply with § 1692g(a)(1) when interest and charges cause the amount due to vary?

## Decision

- The Seventh Circuit reversed the summary judgment for defendants.
- The court held the mortgage remained a “consumer” debt for FDCPA purposes because the transaction was entered primarily for personal, family, or household purposes when incurred.
- The court held the letter did not comply with § 1692g(a)(1) because it failed to state the amount of the debt in a clear, consumer-understandable way.
- The court provided non-mandatory model language describing how to state the amount of the debt when it may increase due to interest and other charges.

## Legal Principles

- Whether an obligation is a “debt” under the FDCPA (i.e., primarily for personal, family, or household purposes) is determined by the nature of the transaction when the obligation is incurred, not by later changes in how collateral or proceeds are used.
- Section 1692g(a)(1) requires an initial communication to state the amount due in a manner a typical consumer can understand.
- When the balance may change daily, a collector should (at minimum) state the amount due as of a specific date, disclose that the amount may increase due to interest or other charges, and provide a practical method to obtain an exact payoff figure.
- Use of substantially similar “safe-harbor” phrasing to convey these points generally avoids liability for an unclear or misleading statement of “the amount of the debt.”

## Conclusion

The Seventh Circuit held that FDCPA coverage turns on the consumer nature of the debt at origination and that a dunning letter violates § 1692g(a)(1) if it does not clearly state the amount owed; the court also supplied model language for variable-balance debts to help ensure compliant disclosures.


Miller v. McCalla, Raymer, Padrick, Cobb, Nichols & Clark, L.L.C., 214 F.3d 872 (7th Cir. 2000)