October 30, 2015 Practice Points

Illinois Bankruptcy Court Applies Fair Debt Collections Practices Act to Proof of Claim

The case is Edwards v. LVNV Funding LLC and Resurgent Capital Servs. (In re Edwards).

By Brett M. Haywood

In Edwards v. LVNV Funding LLC and Resurgent Capital Servs. (In re Edwards), Case No. 14-13263, Adv. Proc. No. 15-384, 2015 WL 5830823 (Bankr. N.D. Ill. Oct. 6, 2015), the Bankruptcy Court for the Northern District of Illinois held that filing a proof of claim to collect on an unenforceable debt violates the Fair Debt Collections Practices Act (FDCPA). The court noted that the Seventh Circuit Court of Appeals has held that filing a legal action outside of bankruptcy to collect a debt barred by the statute of limitations violates the FDCPA.  It also acknowledged a split among the trial courts of the Seventh Circuit as to whether the FDCPA applies in bankruptcy proceedings and to proofs of claims filed by creditors. The court surveyed the opposing case law within the circuit and held that, with respect to the FDCPA, there was no persuasive justification for treating a filed proof of claim differently from a filed collection action. Accordingly, the court held that filing a proof of claim to recover on a claim otherwise barred by the applicable statute of limitations violates the FDCPA.

Brett M. Haywood – October 30, 2015