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Wednesday, August 10, 2016

Ind. Decisions - 7th Circuit decides one Indiana case today

In Alphonse Owens v. LVNV Funding, LLC (SD Ind., Stinson), a 28-page, 2-1 opinion which is one of 3 consolidated cases, two of which are out of J.Stinson's court, Judge Flaun writes:

In each of these consolidated cases, a debt collector filed a proof of claim, defined as “a written statement setting forth a creditor’s claim,” Fed. R. Bankr. P. 3001(a), for a time‐barred debt in a Chapter 13 bankruptcy proceeding. After successfully objecting to the proof of claim, the debtor sued the debt collector in federal court, alleging that the act of filing a proof of claim on a stale debt violates §§ 1692e and 1692f of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (“FDCPA”). In each case, the district court granted the defendant debt collector’s motion to dismiss. For the reasons that follow, we affirm those decisions. * * *

[p. 21] WOOD, Chief Judge, dissenting.

This court held, in Phillips v. Asset Acceptance, LLC, 736 F.3d 1076, 1079 (7th Cir. 2013), that the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq., prohibits a creditor from filing a lawsuit in state court to collect a debt for which the statute of limitations has expired. See also McMahon v. LVNV Funding, 744 F.3d 1010, 1020 (7th Cir. 2014). Today, the majority holds that the creditor may take comparable action within a bankruptcy proceeding, by filing a proof of claim on a debt that it knows to be stale— an action the creditor will take knowing that it will result in payment only if the staleness of the debt slips past the debtor, her lawyer (if she has one), and the trustee, and thus become collectible through the bankruptcy court (at the expense of other creditors). They rely on the broad scope of the types of claims that may or must be filed in bankruptcy, on the extra protections they believe bankruptcy affords, and the fact that the type of limitations bar we are considering here cuts off only the right to sue, not the cause of action itself. None of those rationales holds up under close inspection, in my view, and so I dissent.

Posted by Marcia Oddi on August 10, 2016 04:05 PM
Posted to Ind. (7th Cir.) Decisions