Recent FDCPA Decisions Of The Eleventh Circuit Provide Warning And Encouragement To Creditors And Debt Collectors

Recent opinions from the Eleventh Circuit change the legal landscape for creditors, their attorneys and debtors. Creditors filing bankruptcy proofs of claims will now be subject to the FDCPA, at least in the Eleventh Circuit, but there is renewed hope for certain defenses, such as the litigation privilege.

In Crawford v. LVNV Funding, LLC, et al. (In re Crawford), 758 F.3d 1254 (11th Cir. Jul. 10, 2014), the Eleventh Circuit became the first federal circuit court to apply the Fair Debt Collection Practice Act ("FDCPA") to a proof of claim filed in a Chapter 13 bankruptcy. The court held that the filing of a proof of claim was an attempt to collect a debt and therefore subject to the FDCPA, noting that it need not address whether the Bankruptcy Code preempts the FDCPA because the debt collector failed to raise preemption in its briefs. In Crawford, the debt collector filed a proof of claim on a pre-petition debt that turned out to be time-barred under the applicable Alabama three-year statute of limitations. The debtor then filed an adversary proceeding, alleging that the proof of claim violated the FDCPA. The bankruptcy court dismissed for failure to state a claim and the district court affirmed. The Eleventh Circuit reversed, however, holding that the filing of a proof of claim for a time-barred debt constituted violations of Section 1692e, which prohibits "any false, deceptive, or misleading representation or means in connection with the collection of any debt" and Section 1692f, which prohibits a debt collector from using "unfair or unconscionable means to collect or attempt to collect any debt." The court's ruling runs contrary to several federal circuit courts holding that the Bankruptcy Code preempts the FDCPA. As a result of this decision, debt collectors face increased liability under the FDCPA, and potentially under Florida's counterpart, the Florida Consumer Collection Practices Act, for filing bankruptcy proofs of claims, at least until the Eleventh Circuit addresses the preemption issue. In the meantime, the debt collector has sought certiorari review from the United States Supreme Court based on an apparent circuit split regarding whether the Bankruptcy Code preempts the FDCPA.

In Fenello v. Bank of America, NA, 577 Fed.Appx. 899 (11th Cir. August 12, 2014), the Eleventh Circuit rendered a favorable opinion for creditors and their attorneys. Here, the court held that use of the FDCPA's "mini-Miranda" disclosures in...