Midland Funding, LLC v. Johnson

Filing a facially time-barred creditor’s claim in a Chapter 13 is not a false, deceptive, misleading, unconscionable or unfair means of collecting a debt under the FCDPA, since Chapter 13 debtors are protected from paying dubious claims by the Chapter 13 trustee’s supervision of the case.  Filing a creditor’s claim in the debtor’s Chapter 13 bankruptcy case is not a false, deceptive, misleading, unconscionable or unfair means of collecting a debt and so does not violate 15 USC 1692e or 1692f.  Here, the claim revealed on its face that it was barred by applicable statutes of limitation.  The Bankruptcy Code defines “claim” as a right to payment, which under applicable Alabama law, the creditor retains even after the statute of limitations has run.  Furthermore, the Bankruptcy Code imposes no obligation on a creditor to predetermine whether his claim is time-barred or otherwise subject to any affirmative defense.  Filing a time-barred claim is not unfair.  Chapter 13 debtors are protected from paying dubious claims by the Chapter 13 trustee’s supervision of the case.  Also, it would be difficult for a court to frame an exception to normal bankruptcy to disallow only claims subject to statute of limitations defenses.

United States Supreme Court (Breyer, J.; Sotomayor, Ginsburg, & Kagan, JJ., dissenting); May 15, 2017; 2017 WL 2039159

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