A weekly news service that publishes case summaries of the most recent important bankruptcy-law decisions, tracks major commercial bankruptcies, and reports on developments in bankruptcy reform in...
By Daniel Gill
Oct. 11 — The Supreme Court granted review Oct. 11 of an Eleventh Circuit decision to determine whether a credit collection agency can pursue claims in bankruptcy that would be time-barred in another court ( Johnson v. Midland Funding, LLC, U.S., No. 16-348, review granted 10/11/16 ).
Parties in this case and a similar case from the Seventh Circuit urged that Supreme Court guidance was necessary to resolve a split in the circuit courts.
In the decision below, the U.S. Court of Appeals for the Eleventh Circuit found that a debt collector can be found to be in violation of the Fair Debt Collection Practices Act’s prohibition against misleading or deceptive practices if it files a proof of claim in a bankruptcy case on a debt that the collector knows is otherwise barred by the expiration of the applicable statute of limitations ( Johnson v. Midland Funding, LLC , 11th Cir., No. 15-11240, 2016 ).
The court did not grant review of another circuit decision raising the same question. In Owens v. LVNV Funding, LLC , 7th Cir., No. 15-2082, 8/10/16 , the Seventh Circuit, over a strong dissent by Chief Judge Diane P. Wood, said that a credit collection company wasn’t in violation of the FDCPA when it filed a claim in the bankruptcy case of a debtor even if the collection agency knew that it couldn’t sue to collect on the claim, because the applicable statute of limitations had expired.
The questions now before the high court, as noted in the petition for review, are twofold: (1) whether the Bankruptcy Code precludes applying the FDCPA to the act of filing a proof of claim for a time-barred debt; and (2) whether that act is actionable under the FDCPA.
In the decision below, the Eleventh Circuit made two rulings for which the debt collection company sought high court review. First, it answered a threshold question and said that the FDCPA and the Bankruptcy Code can coexist; neither of the federal statutes must preempt the other ( 28 BBLR 707, 6/2/16).
Then the court addressed whether the debt collector can file a bankruptcy proof of claim for a time-barred debt.
The Eleventh Circuit decided that creditors can file proofs of claim that they know to be barred by the statute of limitations, but those creditors aren’t free from all consequences of filing those claims. If a debt collector chooses to file a time-barred claim, he is “simply opening himself up to a potential lawsuit for an FDCPA violation,” the court said.
Balch & Bingham LLP, Birmingham, Ala., and Williams & Connolly LLP, Washington, filed the petition for review.
To contact the reporter on this story: Daniel Gill in Washington at email@example.com
To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)