What we’re seeing, recently, in such cases, is that courts are often finding for the creditor – a reversal of the tenor of previous judgments. Attorney Don Maurice wrote back in November of 2014 that “a U.S. Circuit Court decision this summer took an extraordinary step when it held that filing a proof of claim on time barred debt is conduct that violates the FDCPA. At the time, attorneys close to both bankruptcy and FDCPA proceedings warned that it would touch off a very real firestorm in that sector of the ARM industry. That has proven to be quite true.”
With a 2014 reporting of just over 3 trillion dollars in non-mortgage consumer debt, up from a 2006 total of 2.4 trillion, why do we see continued reduction in bankruptcy filings? Filings have increased each year but have not yet returned to pre-BAPCPA levels. The amount of reported debt may be deceiving however, as 2006 saw a significant change in the reporting of consumer debt. That was the year that student loan debt started being reported separately from other consumer debt. That change is important, because student loan debt is not normally eligible for discharge in a bankruptcy filing. What we see now is a more accurate accounting of the debt that could be eligible for bankruptcy losses. Those figures allowing for inflation and population growth do not show a significant growth in real potential loss.
In May of this year, several of the larger banks were in the news for not correctly reporting debts on credit bureaus that were discharged in bankruptcy. Pursuant to lawsuits, which were filed in White Plains, New York Bankruptcy Court, and investigations by the US Trustee’s Office, the banks were not correctly updating trade-line accounts on consumer’s credit bureaus with information that the debt was discharged in bankruptcy.
The U.S. Supreme Court recently held that a debtor in a Chapter 7 case cannot “strip-off” or void a wholly unsecured junior mortgage under section 506(d) of the Bankruptcy Code.
DBA International is hosting a webinar on Wednesday, April 22nd on understanding the new risks in the bankruptcy claim process. Companies that participate in the bankruptcy claims process have faced a flood of litigation since the 2014 Crawford opinion by the Eleventh Circuit Court of Appeals.
A recent trend has evolved in FDCPA litigation where courts have allowed bankrupt debtors to file FDCPA claims based on the alleged invalidity of a proof of claim filed by a third party collector and/or debt buyer. But a precedential Circuit Court ruling Tuesday appears to limit the timing of some of those suits.
A long-established exception to the FDCPA’s “least sophisticated consumer” standard has been communications with consumers’ attorneys. Because how could it be argued that an attorney is not “sophisticated?” But a recent Circuit Court ruling opened new ground on that front when it found that some communications with attorneys should be held to the standard.
The 2014 “Year in Review” issue of AIS InSight released last month showed that U.S. bankruptcy filings in 2014 totaled 909,968, down 11.89% from the previous year. Of the Top 50 Creditors listed in bankruptcy filings for 2014, 13 were debt buyers and/or collection agencies.
A U.S. Circuit Court decision this summer took an extraordinary step when it held that filing a proof of claim on time barred debt is conduct that violates the FDCPA. At the time, attorneys close to both bankruptcy and FDCPA proceedings warned that it would touch off a very real firestorm in that sector of the ARM industry. That has proven to be quite true.
The United States Trustee Program, a division of the Justice Department, is investigating several of the largest consumer lenders in the country over their debt collection and portfolio sales tactics relating to accounts owed by consumers under bankruptcy protection, according to The New York Times.