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HAWTHORNE, N.J. (AP) — Ever had a debt collector on your back for money you knew you didn’t owe? Listen to the story of Steven Psaros and take heart.

The Great Recession forced Psaros into foreclosure on the house he had bought in this northern New Jersey town in 1999.

Then, another blow. A debt collector demanded about $11,000 in homeowners’ insurance, money Psaros claimed he didn’t owe under terms of a mortgage refinance signed several years earlier.

He fought back in court and, in a ruling that could change how law firms handle debt collection, a federal judge held last month that the firm representing the debt collector could be liable for damages even if it didn’t know its client was relying on incorrect information.

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Some experts see the ruling as a game-changer in foreclosure actions, which by their nature target people who are under emotional and financial stress.

“Think of the psychological state of people going through foreclosure,” said Seton Hall law school professor Charles Sullivan, who specializes in contracts and employment law. “They can’t pay their mortgage and they think they’re going to be in foreclosure. They’re not looking at the papers, and if they are, whether it’s $360,000 or $370,000, neither is a sum they can pay. They may not even seek an attorney. But attorneys in the past didn’t have the tools this this decision now gives them.”

The debt collection industry is a top source of complaints from consumers, according to the federal Consumer Financial Protection Bureau. Formed in 2011, the bureau began collecting complaints in its system in mid-2013; by the end of that year, it had received more than 30,000 complaints about debt collectors.

The most frequent complaints were about debt collectors attempting to gather money that wasn’t owed. And according to Psaros’ lawsuit, his case falls under that category.

In an email, he said he suffered economic losses during the recession in 2009. According to his suit, BAC Home Loans Servicing, through the law firm Stern, Lavinthal and Frankenberg, filed a debt collection foreclosure action in September 2010. Servicing for the mortgage was later taken over by St. Paul, Minnesota-based Green Tree Servicing.

Through a deal he negotiated when he refinanced his mortgage in 2008, Psaros was paying property insurance and real estate taxes directly, rather than through an escrow account managed by the lender. Last April, however, Green Tree allegedly sent him a letter telling him he owed $10,974.37 for insurance premiums.

Psaros sued Green Tree and Stern Lavinthal in federal court last June, and in the fall the law firm asked U.S. District Judge Jose Linares to dismiss Psaros’ claim because it hadn’t demonstrated “any false or misleading representation by Stern Lavinthal that might give rise to liability” under the federal Fair Debt Collection Practices Act.

The judge disagreed, writing last month that the firm “cannot evade its responsibilities as a debt collector by blaming its client for providing it with factually inaccurate information used in the process of collecting a debt.”

Sullivan predicted the ruling will lead to fewer mistakes as law firms become more vigilant in checking their clients’ claims when seeking to collect debts.

Adam Deutsch, an attorney representing Psaros for the Westwood-based Denbeaux and Denbeaux law firm, said the ruling “sends a message to people on the collection side that you can’t just assume the information you’re being provided by your client is accurate.”

An attorney representing Stern Lavinthal declined to comment, and an attorney for Green Tree didn’t respond to a request for comment.

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