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BankruptcyFeaturesLegislationLitigationLJN NewslettersThe Bankruptcy Strategist

POCs and the FDCPA: A License to File

By Chris Hawkins and Karlene Archer
July 01, 2017

Buyers and servicers of “stale,” or time-barred, debt have been watching the bankruptcy and appellate courts closely of late, as court after court has ruled on whether a key component of their recovery strategy – seeking payment related to such time-barred debts by filing proofs of claim in bankruptcy –€” violates the Fair Debt Collections Practices Act (FDCPA).

Indeed, some companies may even have modified their automated systems and instructed their employees to beware of the Eleventh Circuit after Crawford v. LVNV. Those buyers and servicers likely breathed a sigh of relief on May 15, when the Supreme Court held, in Midland Funding, LLC v. Johnson, that the filing of a proof of claim in a bankruptcy case with respect to an obviously time-barred debt is not false, deceptive, misleading, unfair or unconscion able within the meaning of the Fair Debt Collections Practices Act (FDCPA). While the Court's 5-3 decision certainly provides some cover to creditors going forward, these proofs of claim should be filed with care.

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