In Palazzo v. Bayview Loan Servicing, LLC, No. 24-2169 (4th Cir. Mar. 20, 2026, amended Mar. 31, 2026), the Fourth Circuit affirmed summary judgment for two mortgage servicers on FDCPA and automatic stay claims brought by a Chapter 13 debtor. Applying the “commonsense inquiry” the court adopted in In re Dubois and reaffirmed in Koontz v. SN Servicing Corp., the panel held that monthly statements, payoff statements, and 1098 tax forms sent to a debtor in active bankruptcy were informational communications — not debt collection — because each contained clear and unequivocal disclaimers disavowing any intent to collect. For practitioners following the post-Koontz landscape, I think this decision is a useful one because it crystallizes the doctrinal line between effective and ineffective bankruptcy disclaimers.

Ruben Palazzo obtained a mortgage from SunTrust in 2007. After falling behind, he entered a 2010 repayment agreement, and SunTrust later transferred servicing of the loan to Bayview Loan Servicing, LLC, with Manufacturers and Traders Trust Company (d/b/a M&T Bank) servicing on Bayview’s behalf. Palazzo filed Chapter 13 in February 2016, completed his plan payments by January 2021, and had his case closed in July 2022. While the bankruptcy was pending, the servicers sent Palazzo three categories of written communications: monthly account statements, two payoff statements (each requested by Palazzo), and 1098 tax forms. Palazzo sued, alleging the communications violated the automatic stay under § 362 and constituted unfair debt collection practices under § 1692f of the FDCPA. The District of Maryland granted summary judgment to the servicers, holding none of the documents were attempts to collect a debt.

The Fourth Circuit began its analysis by clarifying — pointedly — which test governs. Palazzo urged the court to evaluate the communications under the “least sophisticated consumer” standard, but the panel refused. As Judge Thacker explained in footnote 8, the least sophisticated consumer standard applies only after a court has determined that a communication is debt collection, to assess whether the collection conduct was unfair or deceptive. The threshold question — whether a communication is debt collection at all — is governed by the “commonsense inquiry” from In re Dubois, 834 F.3d 522 (4th Cir. 2016), which examines “the nature of the parties’ relationship, the objective purpose and context of the communication, and whether the communication includes a demand for payment.” Where the relationship arises from a mortgage, the court further presumes the borrower has “a basic level of understanding and willingness to read with care.”

The opinion’s analytical core is its application of two prior decisions. In Lovegrove v. Ocwen Home Loans Servicing, L.L.C., 666 F. App’x 308 (4th Cir. 2016) (unpublished), the court held that monthly statements bearing disclaimers explicitly disavowing any attempt to collect a debt were not FDCPA-covered communications. By contrast, in Koontz v. SN Servicing Corp., 133 F.4th 320 (4th Cir. 2025), the court held that letters bearing similar-looking disclaimers were debt collection — because the Koontz disclaimers did not disclaim collection at all. They merely informed the debtor that the servicer had selected a particular collection method (lien enforcement, i.e., foreclosure). The Palazzo court found Lovegrove directly on point. The Bayview monthly statements stated: “Our records show that you are a debtor in bankruptcy. We are sending this statement to you for informational and compliance purposes only. It is not an attempt to collect a debt against you.” That language, the court held, “explicitly advised Appellant that the documents in which they appeared were not part of an attempt to collect a debt, and also explicitly told Appellant not to make a payment to Appellees.” Koontz was inapposite because the Palazzo disclaimers did the opposite of what the Koontz disclaimers did.

The two payoff statements bore materially identical disclaimers and warranted the same result on that ground alone. But the court added a second, independent rationale that I find particularly useful: Palazzo had requested both payoff statements. Drawing on Grden v. Leikin Ingber & Winters PC, 643 F.3d 169 (6th Cir. 2011), the panel held that a “ministerial response to a debtor inquiry” is not sent for the “animating purpose” of obtaining payment. This holding gives servicers welcome protection when responding to borrower-initiated requests during bankruptcy. The 1098 tax forms warranted only a paragraph: the forms contained tax information, made no demand for payment, and suggested no method of payment. Not debt collection. As to the stay violation claim, because the communications were “purely informational in nature,” they likewise did not violate the § 362 automatic stay. See In re Duke, 79 F.3d 43, 46 (7th Cir. 1996). The court also rejected Palazzo’s reliance on Alexander v. Carrington Mortgage Services, LLC and Guthrie v. PHH Mortgage Corp., distinguishing each on its facts.

Why This Matters

For mortgage servicers in the Fourth Circuit, Palazzo confirms that Lovegrove-style disclaimers — clear, prominent, and genuinely disavowing collection intent for borrowers in bankruptcy or post-discharge — remain effective at keeping monthly statements and payoff communications outside the FDCPA and the automatic stay. For consumer bankruptcy practitioners, the Lovegrove/Koontz line draws a clear doctrinal line: disclaimers that disavow collection are effective; disclaimers that merely describe a chosen method of collection are not. Communications that in substance demand payment, or whose disclaimers are inconsistent with their content, remain vulnerable. The least-sophisticated-consumer standard remains relevant to FDCPA cases — but, as Palazzo makes clear, only once the threshold debt-collection determination has been made.