Midland Credit Management, one of the largest debt buyers and collectors in the country, is facing a newly certified class action after a New Jersey court found the company may have sent misleading collection letters to thousands of consumers. The Midland Credit Management lawsuit centers on letters that allegedly warned recipients about IRS debt-forgiveness reporting that, in many cases, legally couldn’t have applied to their small-balance debts.

The scale of Midland’s legal exposure is significant: the company and its parent, Encore Capital Group, have paid tens of millions of dollars in penalties and consumer redress since 2015 for related debt collection practices, and MCM reportedly filed more than 11,000 debt collection lawsuits against consumers in New York alone during 2025.

In this article, you’ll learn what the current Midland Credit Management class action actually alleges, whether you might be part of the certified class, what a payout could look like if the case resolves in plaintiffs’ favor, and how this class action differs from being personally sued by Midland for a debt.

Here’s a fact that surprises a lot of readers: this case traces back to a single sentence in a form letter — “We will report forgiveness of debt as required by IRS regulations” — that a federal appeals court said could mislead consumers into paying debts they might otherwise have disputed.

Quick Facts: Midland Credit Management Lawsuit

Detail	Information
Plaintiffs	Robert A. Schultz, Jr. and Donna Schultz, on behalf of a certified class
Defendant	Midland Credit Management, Inc.
Court	Superior Court of New Jersey, Essex County (Law Division); originally filed in U.S. District Court, District of New Jersey
Case Number	ESX-L-142-22 (state court); originally 2:16-cv-04415 (federal court)
Case Type	Certified class action (Fair Debt Collection Practices Act allegations)
Core Allegation	Collection letters allegedly misrepresented IRS debt-forgiveness reporting requirements for debts under $600
Original Filing Date	July 20, 2016
Class Certified	September 29, 2025
Settlement	Not publicly disclosed; no settlement fund exists as of this writing

What Is the Midland Credit Management Lawsuit About?

The Midland Credit Management lawsuit currently generating the most attention is Schultz v. Midland Credit Management, Inc., a class action alleging the company sent misleading debt collection letters in violation of the Fair Debt Collection Practices Act (FDCPA). The letters, sometimes referred to in court filings as “LT1Y” letters, included the statement: “We will report forgiveness of debt as required by IRS regulations.”

Plaintiffs Robert and Donna Schultz argued this statement was false or misleading because IRS reporting requirements for forgiven debt generally don’t apply when the balance is under $600 — and their debts, along with those of the proposed class, were all below that threshold. They claim the language was designed to pressure consumers into paying debts using a reporting threat that didn’t actually apply to them.

Key Takeaway: This case is about the accuracy of specific language in a collection letter — not a broad claim that Midland is barred from collecting debts altogether.

Midland Credit Management Class Action: Legal Status Overview

This case has an unusually long procedural history. It was originally filed in federal court in 2016, dismissed, revived on appeal, dismissed again on standing grounds, and ultimately re-filed in New Jersey state court, where a judge certified the class on September 29, 2025.

• Plaintiffs: Robert A. Schultz, Jr. and Donna Schultz.

• Defendant: Midland Credit Management, Inc.

• Original Court: U.S. District Court for the District of New Jersey (Case No. 2:16-cv-04415).

• Current Court: Superior Court of New Jersey, Essex County, Law Division (Case No. ESX-L-142-22).

The court’s class certification order does not decide whether Midland actually violated the law — it only allows the case to proceed on behalf of a defined group of consumers rather than just the Schultzes individually.

Latest Update 2026

Date	Development
July 20, 2016	Robert and Donna Schultz file a putative class action against Midland Credit Management in the District of New Jersey
2017	District court dismisses the complaint, finding the IRS-reporting statement did not violate the FDCPA
September 2018	The Third Circuit Court of Appeals reverses, holding the statement could plausibly violate the FDCPA
2020–2022	Federal case is dismissed again on standing grounds (lack of proven reliance on the letter)
2022	Case is re-filed in New Jersey state court as Schultz v. Midland Credit Management, Inc., Case No. ESX-L-142-22
September 29, 2025	New Jersey state court grants class certification
As of this writing	No ruling on liability, no settlement, no payout amount publicly disclosed

Key Takeaway: This case has already survived nearly a decade of procedural fights, including a trip to a federal appeals court — a sign that the underlying legal question was genuinely contested, not a quick throwaway claim.

Key Allegations: Deceptive Collection Letter Practices

According to court records, the core allegations include:

1. Midland sent a form collection letter (the “LT1Y” letter) to consumers attempting to collect debts, including accounts originally owed to Capital One.

2. The letter stated Midland would “report forgiveness of debt as required by IRS regulations.”

3. Under IRS rules, reporting requirements for discharged debt generally apply only above a certain dollar threshold (referenced in the case as $600).

4. None of the named plaintiffs’ debts — and allegedly none of the certified class members’ debts — exceeded that threshold.

5. Plaintiffs argue the statement created a false impression that non-payment could trigger IRS reporting consequences that legally could not apply, pressuring consumers to pay.

Is Being Sued by Midland Credit Management the Same as This Lawsuit?

No — and this is one of the most common points of confusion for people searching for information on this topic. Many readers land on “Midland Credit Management lawsuit” because Midland is suing them personally to collect a debt, not because they’re looking to join a class action against the company.

Midland reportedly filed more than 11,000 debt collection lawsuits against consumers in New York alone in 2025, and it regularly files similar suits nationwide. If you’ve been served with a lawsuit from Midland Credit Management or Midland Funding, that is a separate legal matter from the Schultz class action — you would need to respond to that individual case directly (often by filing a formal answer with the court) rather than waiting on this class action for relief.

Key Takeaway: If you were personally sued by Midland over a debt, consult a consumer debt defense attorney about your individual case — the Schultz class action does not pause or resolve lawsuits Midland has filed against you.

Company Background: How Midland’s Legal Troubles Started

Midland Credit Management is a subsidiary of Encore Capital Group, one of the largest debt buyers in the United States. The company purchases charged-off consumer debts, often for a small fraction of face value, and then attempts to collect the full balance from consumers.

Encore Capital Group and its subsidiaries, including Midland Credit Management and Midland Funding, have been under regulatory scrutiny for years. In 2015, the CFPB found the companies violated the FDCPA, the Consumer Financial Protection Act, and the Fair Credit Reporting Act, resulting in a 2015 consent order. In October 2020, the CFPB reached a further stipulated settlement after alleging continued violations, requiring $79,308.81 in consumer redress and a $15 million civil penalty, along with an extension of consent order obligations.

Consumer Complaints and BBB Records

Midland Credit Management holds an “A” rating with the Better Business Bureau despite its regulatory history, though BBB profiles for the company across multiple locations show hundreds of consumer complaints and reviews. Some legal industry reporting has described a rising trend in CFPB complaint volume involving Midland-related debt collection issues in recent years, though exact year-over-year figures vary by source and were not independently verified against the CFPB’s public complaint database for this article.

Key Takeaway: A high BBB rating doesn’t necessarily reflect regulatory or litigation history — check CFPB enforcement actions and court records directly if you’re evaluating a debt collector’s track record.

Who Qualifies for the Midland Credit Management Lawsuit? Eligibility Criteria

Based on the certified class definition in Schultz v. Midland Credit Management, the class generally includes:

• New Jersey residents who received a Midland Credit Management “LT1Y” collection letter

• Letters attempting to collect a Capital One-originated debt with a balance under $600

• Letters sent within the specific date range identified in the litigation (reported in earlier filings as roughly July 2015 through April 2016)

Key Takeaway: This class is narrowly defined by state, letter type, creditor, and balance threshold — it does not cover every consumer who has ever received a letter from Midland.

Midland Credit Management Lawsuit Settlement Amount: Payout Estimates

No settlement has been reached in Schultz v. Midland Credit Management, and no payout amount has been publicly disclosed. The case has only reached the class certification stage — a procedural milestone, not a resolution on damages.

Case	Payout Status
Schultz v. Midland Credit Management (certified 2025)	No settlement; no payout amount publicly disclosed
CFPB 2020 stipulated settlement	$79,308.81 in consumer redress; $15 million civil penalty (not distributed directly to individual claimants in the way a class settlement would be)
CFPB 2015 consent order	Reported $42 million in consumer refunds and $10 million civil penalty tied to earlier violations

Key Takeaway: The larger dollar figures associated with Midland’s regulatory history come from separate CFPB enforcement actions, not from the currently certified Schultz class action — don’t assume those numbers predict this case’s outcome.

How a Potential Payout Would Be Calculated

If Schultz v. Midland Credit Management eventually results in a finding of liability or a settlement, payouts under the FDCPA typically follow a structure that includes:

• Actual damages, if any class members can show direct financial harm

• Statutory damages, which the FDCPA caps in individual actions but calculates differently in class actions — often as the lesser of $500,000 or 1% of the defendant’s net worth, divided among the class

• Attorneys’ fees and costs, paid separately from any amount distributed to class members

This reflects the general FDCPA class action damages framework, not a confirmed number for this specific case.

How to File a Claim (What Happens If This Case Resolves)

There is no claims process yet for Schultz v. Midland Credit Management, since the case has only reached class certification. If it resolves through settlement or a judgment in plaintiffs’ favor, the general process would likely include:

1. Class members receive formal notice of the settlement or judgment, often by mail.

2. A claims administrator opens a claims process with a specific form and deadline.

3. Eligible class members submit any required information to confirm eligibility.

4. The court holds a final approval hearing (if a settlement) before distribution.

5. Payments are issued to eligible class members who filed valid claims.

Key Takeaway: If you believe you may be a class member, watch for official mailed notice from the court or a claims administrator rather than relying on unsolicited emails or calls claiming to represent this case.

Filing Deadline and Statute of Limitations

There is no settlement claims deadline yet because no settlement has been reached in this case. Separately, the FDCPA itself carries a one-year statute of limitations for individual claims from the date of the alleged violation, though class action deadlines and rules can differ.

If you believe you personally received a misleading collection letter from Midland outside of this specific certified class, consult a consumer protection attorney promptly, since FDCPA deadlines are notably short compared to many other consumer protection statutes.

Is the Midland Credit Management Lawsuit a Scam?

The underlying litigation is real, documented through federal and state court records, including a published Third Circuit Court of Appeals opinion and a 2025 class certification order. What consumers should watch for are unrelated scam calls or letters claiming to represent a “Midland Credit Management settlement” that isn’t tied to an actual, verifiable court case.

Because Midland itself is a debt collector that contacts consumers directly and frequently, some people confuse legitimate settlement notices with debt collection attempts (or vice versa) — always verify any notice against the specific case name and court listed before responding or providing payment information.

Other Related Midland/Encore Capital Lawsuits

Midland Credit Management’s litigation history extends well beyond the Schultz case, including:

• The 2015 CFPB consent order against Encore Capital Group and its subsidiaries for FDCPA, CFPA, and FCRA violations, resulting in a reported $42 million in consumer refunds and a $10 million civil penalty.

• The October 2020 CFPB stipulated settlement adding a $15 million civil penalty after alleged continued violations of the 2015 order.

• A large volume of individual debt collection lawsuits filed by Midland against consumers nationwide, including more than 11,000 reportedly filed in New York in 2025 alone.

If you’ve researched the related [Midland Funding lawsuit](https://lawfold.com/midland-funding-lawsuit/) coverage, note that Midland Funding (which purchases the debt) and Midland Credit Management (which collects on it) are separate but affiliated entities frequently named together in the same disputes.

Frequently Asked Questions

What is the Midland Credit Management lawsuit about?

The current Midland Credit Management lawsuit generating attention is Schultz v. Midland Credit Management, Inc., a class action alleging the company’s “LT1Y” collection letters misrepresented IRS debt-forgiveness reporting rules for debts under $600. A New Jersey state court certified the class on September 29, 2025, though no ruling on liability or settlement has been reached as of this writing.

Who qualifies for the Midland Credit Management lawsuit?

Based on the certified class definition, eligibility generally covers New Jersey consumers who received a specific Midland “LT1Y” collection letter regarding a Capital One-originated debt under $600, sent within a defined date range around 2015-2016. If you received a different type of Midland letter or live outside New Jersey, you likely are not part of this specific certified class.

How much is the Midland Credit Management lawsuit settlement worth?

No settlement has been reached in the Schultz case, so there is no confirmed payout amount. Separate CFPB enforcement actions against Midland’s parent company have resulted in tens of millions of dollars in penalties and consumer redress over the years, but those figures come from different regulatory cases and should not be treated as a prediction for this class action’s outcome.

Is a Midland Credit Management lawsuit the same as being sued by Midland for a debt?

No. Many people search for “Midland Credit Management lawsuit” because Midland has filed a debt collection suit against them personally — that is a separate legal matter requiring its own response, often by filing an answer in the court where Midland sued you. The Schultz class action is a case against Midland by consumers, not a case Midland has filed against a borrower.

What is the filing deadline for the Midland Credit Management lawsuit?

There is no settlement claims deadline yet since no settlement exists in the Schultz case. If you were personally sued by Midland Credit Management over a debt, court deadlines to respond are typically short (often 20-35 days depending on the state), so consult a consumer debt attorney immediately rather than waiting.

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What Affected Consumers Should Do Now

The Midland Credit Management lawsuit reached a real milestone in September 2025 when a New Jersey court certified the class in Schultz v. Midland Credit Management, but the case is still far from a payout — there is no settlement, no judgment on liability, and no claims process yet.

If you believe you received one of the specific “LT1Y” letters described in this case, the most useful step right now is to keep any collection letters and records you have from Midland, since documentation will matter if the case reaches a settlement or judgment.

Before you do anything else:

• Save any collection letters you received from Midland Credit Management, especially ones mentioning IRS reporting

• If you were separately sued by Midland over a debt, respond to that individual lawsuit’s deadline — don’t wait on this class action

• Avoid unsolicited calls or emails claiming to settle a “Midland lawsuit” without verifying the case name and court

• Follow updates through official court records or established legal news outlets rather than unofficial claim forms

This case is worth watching, not acting on urgently, unless you’ve been personally served with a debt collection lawsuit by Midland — in that situation, get legal advice immediately, since your response deadline is unrelated to this class action’s timeline.

Sources: ClassAction.org, Justia (case dockets), CourtListener, the Consumer Financial Protection Bureau (enforcement action pages), ACA International, Bloomberg Law, and additional reporting on Schultz v. Midland Credit Management, Inc. (Case No. ESX-L-142-22, Superior Court of New Jersey, Essex County; originally 2:16-cv-04415, D.N.J.) and the CFPB’s 2015 and 2020 enforcement actions against Encore Capital Group and its subsidiaries.