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<b><i>Crawford v. LVNV Funding, LLC</i></b>

By Wayne Kitchens and Sabrina A. Neff

Filing a proof of claim against a bankruptcy estate for a debt the creditor knows is legally unenforceable pursuant to the statute of limitations is unfair, unconscionable, deceptive, or misleading to a consumer under the Federal Debt Collection Practices Act, 15 U.S.C. ' 1692 et seq., held the U.S. Court of Appeals for the Eleventh Circuit in Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11th Cir. 2014), cert. denied, 135 S. Ct. 1844, 191 L. Ed. 2d 724 (2015).

The debtor alleged that the creditor's filing of a proof of claim on a time-barred debt used false, deceptive or misleading representation or means in connection with the collection of the debt (15 USC ' 1692e), and used unfair or unconscionable means to collect or even attempt to collect the debt (15 USC ' 1692f). Applying the least sophisticated consumer standard, the Eleventh Circuit reversed the district court and held that filing a proof of claim on a time-barred debt created a misleading impression that such debt was enforceable. The appeals court likened the filing the proof of claim to filing a stale action in state court, reasoning that in bankruptcy, the least sophisticated consumer may not know how limitations can be used as a basis to object to a proof of claim. Additionally, the court noted the problem of the automatic allowance, the reduction of payments to other creditors, and the waste of the trustee's and the court's time and resources.

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