The United States Supreme Court issued a ruling Monday resolving the question of whether filing a proof of claim for a debt that is time-barred by the statute of limitations is a violation of the Fair Debt Collection Practices Act (FDCPA). In Midland Funding, LLC v. Johnson, Justice Stephen Breyer, writing for the majority, held that filing a proof of claim for a debt that is barred by the applicable state statute of limitations is NOT a violation of the FDCPA.
The case arose out of a Chapter 13 bankruptcy case in which Midland filed a proof of claim for a credit card debt that, on its face, showed that the credit card had not been used in more than 10 years. Such a claim was barred by the six-year statute of limitations in Alabama. After successfully objecting to the claim, the debtor then sued Midland, claiming that the filing of the proof of claim on an obviously time-barred debt was “false,” “deceptive,” “misleading,” “unconscionable” and “unfair” under the FDCPA. The district court held that the FDCPA did not apply and dismissed the lawsuit. The Eleventh Circuit reversed.