In Crawford v. LVNV Funding, LLC, No. 13-12389 (July 10, 2014), the Eleventh Circuit held that the Fair Debt Collection Practices Act (FDCPA) prohibits filing a proof of claim on a time-barred debt in bankruptcy court, where the party attempting to collect knows the debt is time barred. The appellate court observed that a “deluge has swept through U.S. bankruptcy courts” of consumer debt buyers attempting to collect expired debts from debtors in Chapter 13 bankruptcy. Applying the “least sophisticated consumer” test, the court held that such conduct constitutes a prohibited debt collection activity.
The FDCPA prohibits any “unfair or unconscionable means to collect or attempt to collect any debt.” 15 U.S.C. § 1692f. The Eleventh Circuit held that attempting to collect time-barred debts in bankruptcy court violates this statute because the “least sophisticated” Chapter 13 debtor may be unaware that a claim is time barred and fail to object. In reaching this conclusion, the court cited concerns including the reduction of payments to other legitimate creditors with enforceable claims, and the waste of judicial resources to address time-barred claims.