Attempting to Collect A Time-Barred Consumer Debt in Bankruptcy Violates the Fair Debt Collection Practices Act

Stanley Crawford owed a debt to a furniture company; but, that debt was unenforceable because collection was barred by the applicable state statute of limitations. Another party purchased that debt from the furniture company. When Mr. Crawford filed a Chapter 13 bankruptcy petition, the holder of that time-barred debt filed a proof of claim in bankruptcy court in an effort to collect that debt. Mr. Crawford alleged that the party that had filed the proof of claim violated the Fair Debt Collection Practices Act (FDCPA) by asserting a time-barred claim. United States Court of Appeals for the Eleventh Circuit concluded that Mr. Crawford was correct. Crawford v. LVNV Funding, LLC, Case No. 13-12389 (decided July 10, 2014).

The FDCPA creates a remedy for a consumer against a debt collector who uses “any false, deceptive, or misleading representation or means in connection with a collection of any debt.” 15 U.S.C. § 1692e. The FDCPA also prohibits any “unfair or unconscionable means to collect or attempt to collect any debt.” Id. § 1692f.

Applying the Court’s “least-sophisticated consumer standard” for determining whether or not an activity constitutes an unfair, unconscionable, deceptive or misleading debt collection practice, the Court concluded that filing a proof of claim in bankruptcy to collect a time-barred debt was a prohibited debt collection activity. A “least sophisticated” debtor might be unaware that a claim filed in bankruptcy is time barred and unenforceable and fail to object. That could result in a bankrupt debtor’s limited funds being used to pay a time-barred debt. Forcing a bankrupt to litigate enforcement of a time-barred claim would waste the limited resources of the bankrupt’s estate.

The Crawford decision provides a powerful remedy to consumers who file for bankruptcy. A holder of debt will need to carefully determine whether a claim is time-barred before they file a proof of claim against a consumer.

The opinion is available at

For more information on the Fair Debt Collection Practices Act, contact your Appellate Counsel at Smith, Gambrell & Russell.

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