FDCPA

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No Conflict Between FDCPA and Code

“The Bankruptcy Code does not preclude an FDCPA claim in the context of a Chapter 13 bankruptcy when a debt collector files a proof of claim it knows to be time-barred.” Johnson v. Midland Funding, LLC, No. 15-11240 (11th Cir. May 24, 2016). In two separate cases, Alieda Johnson and Judy N. Brock sued debt collectors for violation of the FDCPA alleging that they used “false, deceptive, or misleading representation or means in connection with the collection of any debt” (15 U.S.C. § 1692e) when they filed proofs of claim in the plaintiffs’ bankruptcy cases for debts they knew to be time-barred. The district courts granted the debt collectors’ motions to dismiss finding that the Bankruptcy Code permits a creditor to file a proof of claim for which it has a “right to payment,” and that the FDCPA and the Code are irreconcilable. The cases were consolidated on appeal to the Eleventh Circuit. [Read more…] about No Conflict Between FDCPA and Code

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POC for Time-Barred Debt May Violate FDCPA

The Bankruptcy Court for the Northern District of Illinois added to its body of law finding that a debt collector may violate the FDCPA by filing a proof of claim for a time-barred debt. Davenport v. Calvary Investments (In re Davenport), No. 14-30261, Adv. Pro. 15-559 (Bankr. N.D. Ill. Dec. 14, 2015). [Read more…] about POC for Time-Barred Debt May Violate FDCPA

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Eighth Circuit BAP Gets it Wrong in FDCPA Case

Filing an accurate proof of claim on a stale debt does not violate the FDCPA. Gatewood v. CP Medical, LLC, No. 15-6008 (B.A.P. 8th Cir. July 10, 2015). Mr. and Mrs. Gatewood filed for chapter 13 bankruptcy and CP Medical, a medical collection agency, filed a proof of claim on a debt that was time-barred under Arkansas law. After the Gatewoods converted to chapter 7, they filed an adversary complaint against CP Medical for seeking payment on a stale debt “as a means of debt collection that is either false, misleading, deceptive, unfair, or unconscionable” in violation of the FDCPA.

The bankruptcy court, relying on Eighth Circuit precedent, found that an attempt to collect on a stale debt is not a violation of the FDCPA. It further found that the Bankruptcy Code provides the only relief available to a debtor in cases such as these. The BAP affirmed. [Read more…] about Eighth Circuit BAP Gets it Wrong in FDCPA Case

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Must Read – Why Filing Stale Claims in Bankruptcy Violates the FDCPA

On Friday, Debtor in Johnson v. Midland Funding filed her opening brief in the Eleventh Circuit.  It is well worth the read.  In summary:

1.  There is no textual support for the conclusion that Bankruptcy Code precludes valid FDCPA claims.

2.  When it comes to proofs of claim, debt collectors do not have a “right” to file a claim on a time-barred debt.  Even though the debt is not extinguished by the statute of limitations, the expiration of the SOL renders the obligation legally unenforceable.  As such, it is not a “claim” for purposes of the Code.

3.  The bankruptcy process is designed to run fairly and efficiently; there is no room for a pointless exercise of lodging invalid claims that require trustees or debtors to object.  Debt collectors tax scarce judicial and party resources by filing such frivolous claims, and divert funds from honest creditors.  The aggregate cost to the system from debt collectors filing stale claims is staggering.

4.  Debt collectors can easily comply with both the Code and the FDCPA by refraining from filing stale claim.  Debt collectors are not compelled to take any action under the Code that violates the FDCPA.

 

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NABCA Weighs in on Intersection between Bankruptcy Code and FDCPA

NCBRC filed an amicus brief on behalf of the NACBA membership in the case of Garfield v. Ocwen Loan Servicing, No. 15-527 (2d Cir. filed June 13, 2015). The brief seeks reversal of a district court finding that the Bankruptcy Code precludes application of the FDCPA in any case involving a discharged debt. Overlapping federal statutory schemes are presumed to be non-preclusive unless the plain text of one or the other explicitly creates preclusion or where there is an irreconcilable conflict between the two. Morton v. Mancari, 417 U.S. 535, 550 (1974). [Read more…] about NABCA Weighs in on Intersection between Bankruptcy Code and FDCPA

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One of Three Illinois Cases Gets it Right in FDCPA Case

Three cases out of the Northern District of Illinois address the issue of whether filing a proof of claim in chapter 13 bankruptcy for a stale debt can be the basis for a FDCPA claim. In Murff v. LVNV Funding (In re Murff), No. 13-44431, Adv. Proc. 14-790 (Bankr. N.D. Ill. June 15, 2015) and LaGrone v. LVNV Funding (In re LaGrone), 525 B.R. 419 (Bankr. N.D. Ill. Jan. 21, 2015), the courts essentially found the element of deception for a FDCPA violation is not present in the context of a bankruptcy case. In Avalos v. LVNV Funding (In re Avalos), No. 13-40865, Adv. Proc. 15-91(Bankr. N.D. Ill. June 12, 2015), Judge Schmetterer found that the determination of whether debt-collector conduct is deceptive is an issue of fact to be addressed on a case-by-case basis. [Read more…] about One of Three Illinois Cases Gets it Right in FDCPA Case

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Cert. Denied in LVNV v. Crawford

The Supreme Court has declined to take up the issue of whether filing a stale proof of claim in a bankruptcy case violates the FDCPA.  Previously, the Eleventh Circuit found that a proof of claim to collect a stale debt in chapter 13 violates the Fair Debt Collection Practices Act.  In Crawford, however, the Eleventh Circuit side-stepped the issue of whether an irreconcilable conflicts exists between the Bankruptcy Code and the FDCPA, such that creditor’s conduct in bankruptcy would not be actionable under the FDCPA.