In a 5-3 decision handed down today, the U.S. Supreme Court held that the federal Fair Debt Collection Practices Act (FDCPA) is not violated when a debt collector files a proof of claim for a debt subject to the bar of an expired limitations period. The decision:

  • held that the filing of such a proof of claim is not false, misleading, deceptive, or unconscionable in violation of sections 1692e or f of the FDCPA;
  • found that claims under the bankruptcy code need not be capable of being “enforceable” in a civil lawsuit; and,
  • does not preclude application of the FDCPA to bankruptcy litigation.

The decision involved RMA member Midland Funding, LLC. The company sought review by the U.S. Supreme Court of an adverse decision it had received from the Eleventh Circuit Court of Appeals. A copy of the decision in Midland Funding, LLC v. Johnson is available here.

RMA filed a friend-of-the-court brief with the U.S. Supreme Court in support of Midland. The brief was authored by a team of attorneys led by RMA outside counsel Don Maurice and Cavalry Portfolio Services, LLC’s General Counsel, Christian Parker. A copy of the brief (which was paid for with a general donation by Cavalry Portfolio Services, LLC) is available here. The Supreme Court’s opinion cites two earlier decisions favorable to RMA members that were obtained by Mr. Maurice and discussed in RMA’s friend-of-the-court brief. RMA’s briefing argued that claims need not be “enforceable” to allow creditors to file a proof of claim, as the Supreme Court held today.

The Federal Trade Commission and Consumer Financial Protection Bureau, in their joint friend of the court brief mentioned RMA, its Certification Program, and its standards concerning collection of “time-barred” debt. Many cases were stayed across the country (including cases before the Third and Fifth Circuit Court of Appeals) awaiting today’s decision. Today’s decision should resolve many of them. RMA will continue to work for its members on this issue and others.

This Alert is intended for Members of the Receivables Management Association International (formerly DBA International) and is for informational purposes only and is in no way intended to provide legal advice. Members are encouraged to consult with an attorney of their choice for legal advice concerning this matter.