On October 11, 2016, the United States Supreme Court granted certiorari in the matter of Johnson v. Midland Funding LLC, on appeal from the Eleventh Circuit Court of Appeals, in order to resolve whether a conflict exists between the Fair Debt Collection Practices Act (“FDCPA”) and the Bankruptcy Code. In Midland Funding, the appellate court found a debt collector to have violated the FDCPA by filing a proof of claim on time-barred debt in a Chapter 13 bankruptcy.
Under 15 U.S.C. § 1692e, a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt and, under 15 U.S.C. § 1692f, may not undertake to collect debts that are not permitted by law. Previously, in Crawford v. LVNV Funding, LLC, 758 F.3d 1254, 1261 (11th Cir. 2014), the Eleventh Circuit held that filing a proof of claim in a Chapter 13 bankruptcy for a debt that the creditor knows is time-barred constitutes a FDCPA violation.
The Eleventh Circuit, however, did not address in Crawford the issue of whether the Bankruptcy Code preempts the FDCPA on this point. The Bankruptcy Code, as the Eleventh Circuit recognized, permits creditors to file proofs of claim on time-barred debt—and it therefore appears to be in possible conflict with the FDCPA.
The Eleventh Circuit revisited this issue in Midland Funding, and concluded that the Bankruptcy Code and the FDCPA were not in irreconcilable conflict. Instead, the court held that the Bankruptcy Code provides general protections against creditor misconduct, whereas the FDCPA provides “an additional layer” of protection with respect to creditors that are also governed by the FDCPA.
Midland Funding appeals on two bases: (1) whether the filing of an accurate proof of claim in bankruptcy on debt on that is time-barred violates that FDCPA, and (2) whether the Bankruptcy Code precludes the application of the FDCPA with respect to the issue of filing accurate proofs of claim on time-barred debt.