As bankruptcy filings increase, some debt collectors have started filing proofs of claim on debts otherwise barred by the applicable state statutes of limitations.  The Eleventh Circuit, however, recently held in Crawford v. LVNV Funding, LLC that filing a proof of claim to collect a time-barred debt in Chapter 13 bankruptcy violated the Fair Debt Collection Practices Act (FDCPA). 

 

The Court likened proofs of claim to collection lawsuits concluding, "[s]imilar to the filing of a stale lawsuit, a debt collector's filing of a time-barred proof of claim creates the misleading impression to the debtor that the debt collector can legally enforce the debt."  The Court reasoned that few unsophisticated debtors would be aware that a claim is time barred and may not know that they can object.  And, if the debtor (or Trustee) does not object, the claim is automatically paid out of the debtor's future wages, reducing payments to other legitimate creditors with enforceable claims. 

 

We have assisted collection agencies in revising their practices and procedures and crafting appropriate disclosures. 

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