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.