The 11th Circuit Court of Appeals recently held that a creditor who files a proof of claim on debt that has expired under the applicable statute of limitations has violated the Fair Debt Collection Practices Act (“FDCPA”).
In Crawford v. LVNV Funding, LLC, the debtor made his last payment on the debt in 2001. The applicable time period to collect the debt was three years. In 2008, the debtor filed a Chapter 13 bankruptcy and the creditor filed a proof of claim. No objections were filed against the claim and the trustee made payments on it to the creditor. Years later the debtor challenged the claim in an adversary proceeding alleging that the time barred proof of claim violated the FDCPA.
The 11th Circuit determined that filing a claim for a stale debt was a “misleading impression to the debtor that the debt collector can legally enforce the debt.” Further, the court rejected the creditor’s argument that filing a claim was not collection activity and the FDCPA did not apply.
The court reasoned that a debtor’s memory of a debt from many years ago fades, making it difficult for the debtor to defend against it. Most debtors in this situation are unaware that the debt has expired. The court also stated that a claim being time barred is a sufficient basis for sustaining an objection to it.
The 11th Circuit did not decide the issue of whether the FDCPA was preempted by the Bankruptcy Code.
If you are considering filing a Chapter 7 or Chapter 13 bankruptcy case and you have old debts, we can review the claims filed against you and determine whether they are barred by the applicable statute of limitations.
Contact The “Milwaukee Bankruptcy Attorneys,” DeLadurantey Law Office, LLC. DeLadurantey Law Office focuses on student loan debt, Chapter 7 and 13 bankruptcy, debtor’s rights, debt negotiations, debt relief, mortgage loan modifications, and foreclosure defense. A “defender of the little guy, “DeLadurantey Law Office serves the following location – Milwaukee, South Milwaukee, West Milwaukee, Waukesha City, Waukesha Town, Kenosha, Racine, and all other municipalities in Milwaukee County, Waukesha County, Kenosha County, and Racine County. We can be contacted by phone: (414) 377-0518 and can be found on the Internet and on Facebook.