[CLBS] Just in from the National Consumer Bankruptcy Rights Center

[D. Blair Clark]

Cert. Granted in FDCPA Case

Posted by NCBRC - October 12, 2016

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).

 

 

 

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