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U.S. Supreme Court Holds Debt Collectors are Not Liable under the FDCPA for Pursuing Time-Barred Claims in Bankruptcy Court

The Banking Law Journal

The U.S. Supreme Court recently held that filing a proof of claim on a time-barred debt is not a false or deceptive collection practice within the meaning of the Fair Debt Collection Practices Act. The authors of this article discuss the decision.

In a 5-3 decision in Midland Funding, LLC v. Johnson, the U.S. Supreme Court held that a debt collector’s filing of a time-barred proof of claim in a Chapter 13 bankruptcy proceeding is not “false,” “deceptive,” “misleading,” “unfair,” or “unconscionable” within the meaning of the Fair Debt Collection Practices Act (“FDCPA”).

In overturning the U.S. Court of Appeals for the Eleventh Circuit, the Supreme Court held that the protections and remedies afforded to consumers under the FDCPA with respect to time-barred claims, are unavailable in Chapter 13 bankruptcy proceedings. The Supreme Court’s decision makes clear that debt collectors may pursue time-barred debts in a debtor’s bankruptcy proceeding.

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“U.S. Supreme Court Holds Debt Collectors are Not Liable under the FDCPA for Pursuing Time-Barred Claims in Bankruptcy Court,” by Jonathan M. Robbin, Edward W. Chang, Diana M. Eng, and Sholom Wohlgelernter was published in the October 2017 edition of The Banking Law Journal, an A.S. Pratt Publication. Reprinted with permission.

This article was first published as a Blank Rome Consumer Finance Litigation Advisory in May 2017.