Circuit Court Holds that Filing a Proof of Claim on Time-Barred Debt Violates FDCPA

Addressing what it termed “a deluge [that] has swept through U.S. bankruptcy courts of late” the 11th Circuit Court of Appeals in Crawford v. LVNV Funding, LLC  last week held that filing a proof of claim on time barred debt is conduct that violates the Fair Debt Collection Practices Act (FDCPA).

The last payment on the underlying debt was made in 2001 and subject to Alabama’s three year statute of limitations. The debtor filed for relief under the Bankruptcy Code in 2008 during which the current owner of the debt filed a proof of claim. Neither the debtor nor the Chapter 13 Trustee objected to the claim and the Trustee distributed payments to the creditor during the pendency of the bankruptcy case.