October 06, 2015 Practice Points

Maine and Illinois Courts Disagree Over Fair Debt Collections Practices Act

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

By Curtis S. Miller and William M. Alleman Jr.

In Martel v. LVNV Funding LLC and Resurgent Capital Servs. (In re Martel), Case No. 14-20198, Adv. Proc. No. 15-2001, 2015 WL 5984890 (Bankr. D. Me. Oct. 13, 2015), the Bankruptcy Court for the District of Maine held that filing an accurate proof of claim—one that contains all required information including the timing of the underlying debt—in accordance with the Bankruptcy Rules and Code even when that debt is barred by the statute of limitations does not violate the Fair Debt Collections Practices Act (FDCPA). The court concluded that creditors who file such proofs of claim do not mislead or harass debtors in violation of the FDCPA. Likewise, they do not abuse the bankruptcy process because nothing in the Bankruptcy Code prohibits filing a proof of claim when the underlying debt is subject to a statute of limitations defense. The bankruptcy court further held that the Bankruptcy Code does not preempt or preclude application of the FDCPA, and in doing so, observed that creditors are obligated to follow both. In reaching its holding, the court acknowledged a split of authority as to whether filing a proof of claim for a stale claim violates the FDCPA and recognized that the Eleventh Circuit had reached a different result.  Nevertheless, the court determined that its holding sided with the majority of other courts that have addressed the issue.

The Bankruptcy Court for the Northern District of Illinois reached the opposite conclusion 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).

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