The Supreme Court today granted certiorari in the case of Midland Funding, LLC. v. Johnson, No. 16-348, in which the Eleventh Circuit found that not only does a proof of claim on a time-barred debt violate the FDCPA, but the FDCPA claim is not in conflict with, nor is it precluded by, the Bankruptcy Code.
This issue has been circulating in various forms throughout the courts as many debt collectors have made it a business practice to file proofs of claim in bankruptcy cases on debts they know to be time-barred and, therefore, uncollectible. Success of this practice depends upon the claim slipping past the debtor and his or her attorney, if the debtor is represented, as well as the bankruptcy trustee. In many cases, trustees have conceded that they do not routinely check proofs of claim for validity based on timeliness. NACBA has taken a stand on the issue, arguing that such practices violate the FDCPA and that the debtor can prosecute the FDCPA claim notwithstanding the existence of the bankruptcy action. Owens v. LVNV Funding, LLC, ___F.3d ___, 2016 WL 4207965 (7th Cir. Aug. 10, 2016); Nelson v. Midland Credit Management, Inc., ___ F.3d ___, 2016 WL 3672073 (8th Cir. July 11, 2016).
Tags: FDCPA, Supreme Court
