Filing Proof of Claim on Time Barred Debt in Bankruptcy Case Violates FDCPA

In Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11th Cir. 2014), the Eleventh Circuit Court of Appeals held that filing a proof of claim in a Chapter 13 bankruptcy case on debt that was outside the statute of limitations may violate the FDCPA.  This holding has not been adopted by all circuits, but it is, in my opinion, the correct application of the law.  Logic dictates that if a debt collector could not sue on a time barred debt, it should not be able to collect on the debt in a Chapter 13 case.

The Seventh Circuit in reviewing the issue found that the Bankruptcy Code and FDCPA could both be applied, and that neither the Bankruptcy Code nor the FDCPA trumps the other.  See Randoph v. IMBS, Inc., 368 F.3d 726 (7th Cir. 2004).  A recent ruling in the Southern District of Indiana held that the debt collector's motion to dismiss should be overruled and the debtor's FDCPA claim could go forward where the debt collector had filed a proof of claim on a time barred debt.  Patrict v. Quantum3 Funding, LLC, No. 1:14-cv-00545-TWP (Dist. Ct. S.D. Indiana 2015).  But the court in In re Poteet held just the opposite.  In re Poteet, No. 08-14936, Adv. No. 11-1081 (E.D. TN. 2011).

It will be interesting to see how the law develops on this issue.  You can bet there will be more FDCPA claims filed against debt collectors who file proofs of claim in bankruptcy cases.

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