In Owens v. LVNV Funding, LLC, the Seventh Circuit added its voice to the fray over whether filing a time-barred proof of claim in a Chapter 13 bankruptcy violates the Fair Debt Collections Practices Act (FDCPA). The divided panel declined to follow the Eleventh Circuit and instead joined the Eighth Circuit when it held that filing time-barred claims is permissible. As Chief Judge Wood pointed out in her dissent, the Owens majority “miss[ed] the boat” on this one. However, the Supreme Court will soon have an opportunity to calm the waters, having granted certiorari in the Eleventh Circuit’s Johnson v. Midland Funding, LLC decision.
The facts of the three underlying, consolidated cases are straightforward. In each, a debt collector filed a proof of claim in the debtor’s Chapter 13 bankruptcy for a time-barred debt—that is, a stale debt for which the statute of limitations had long since expired. The debtor then filed suit and asserted that filing a proof of claim on a time-barred debt violated the FDCPA as a false, deceptive, misleading, unfair, or unconscionable means to collect the debt. The district court granted the debt collector’s motion to dismiss, and the debtor appealed.
Elijah C. Stone, Soggy Debt—The Seventh Circuit Widens the Split on FDCPA Liability for Time-Barred Claims in Bankruptcy, 70 SMU L. Rev. 213 (2017)