Is The Filing Of A 'Stale' Proof Of Claim A Violation Of The FDCPA?

Last year, the Eleventh Circuit was the first to hold that a debt collector engages in deceptive, misleading, unfair, or unconscionable conduct in violation of the Fair Debt Collection Practices Act (the "FDCPA") by filing a bankruptcy proof of claim on a debt that is barred by the applicable statute of limitations. Crawford v. LVNC Funding, LLC, 758 F.3d 1254, 1261 (11th Cir. 2014).

In Crawford, a creditor filed a proof of claim on a time barred debt and the trustee and the debtor failed to object to the claim. The debtor filed an adversary proceeding, alleging that the creditor's conduct violated the FDCPA. The Eleventh Circuit reasoned that since the filing of a lawsuit to collect a time barred debt violates the FDCPA, so does the filing of a proof of claim on a time barred debt. The court opined that "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."

However, the 'abusive' act of filing a time barred proof of claim is not a violation of the FDCPA in most other jurisdictions. The United States Supreme Court's denial of certiorari earlier this year predictably brought a flurry of opinions. And the vast majority of courts refused follow the Crawford rationale. Martel v. LVNV Funding, LLC, 2015 Bankr. LEXIS 3465, at *4 (Bankr. D. Me., October 13, 2015).

Recent opinions note significant differences between a lawsuit initiated to collect on a time barred debt and the filing of a proof of claim filed on a time barred debt. Martin v. Quantum3 Grp. (In re Martin), 2015 Bankr. LEXIS 3450 (Bankr. N.D. Miss. Oct. 9, 2015) (finding "the filing of a time-barred proof of claim cannot serve as the basis for an FDCPA violation, as the running of a statute of limitations is an affirmative defense and not "part of the affirmative claim") (citing Johnson v. Midland Funding, LLC, 528 B.R. 462, 471 (Bankr. M.D. Ala. 2015); Perkins v. LVNV Funding, LLC, 533 B.R. 242 at 261 (Bankr. W.D. Mi. July 8, 2015) ("[B]ankruptcy cases, unlike collection actions, provide debtors with the benefit of the automatic stay... [which prohibits debt collectors] from taking actions to collect debts absent relief from the stay or an exception thereto. The debt...