By Timothy D. Hedrick and Mark S. Mitchell

The Fair Debt Collection Practices Act (the “FDCPA”), codified at 15 U.S.C. §§ 1692–1692p, is a consumer protection statute intended to curtail false, deceptive, or unfair debt collection practices. The FDCPA regulates the conduct of “debt collectors,” [1] and provides consumers with a civil cause of action against those debt collectors who violate it. [2] Among the FDCPA’s prohibitions are that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt” and that “[a] debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt.” [3] Courts have uniformly held that threatening to sue—or actually filing suit—based on a time barred debt violates these prohibitions. [4]

If filing a lawsuit based upon a time-barred claim violates the FDCPA, a new question arises—does filing a proof of claim in a bankruptcy case based on a time-barred claim violate the FDCPA? The answer is less clear that one might expect.

In Crawford v. LVNV Funding, LLC , 758 F.3d 1254 (11th Cir 2014), the Eleventh Circuit considered that very question. Applying the “least sophisticated consumer” test courts apply under the FDCPA, [5] the Eleventh Circuit concluded that “a debt collector’s filing of a time-barred proof of claim creates the misleading impression to the debtor that the debt collector can legally enforce the debt” and thus violates the FDCPA. [6]

At first blush, Crawford appears to answer the question. However, although the court in Crawford concluded that filing a time-barred proof of claim would violate the FDCPA, Crawford expressly declined to consider another important question—whether the Bankruptcy Code preempts the FDCPA (precluding a claim/remedy under the FDCPA). [7] On September 25, 2015, a district court in the Middle District of Florida issued an Order concluding that the Bankruptcy Code precluded an FDCPA claim where the debtor had identified the debt collector as a creditor and, thereafter, the debt collector filed a time barred proof of claim. [8] Accordingly, although the act of filing a time-barred proof of claim violates the FDCPA under Crawford , it remains an open question within the Eleventh Circuit whether (and under what specific facts) the FDCPA’s prohibition is preempted by the Bankruptcy Code.

Recognizing this uncertainty, debt collectors should be cognizant of the potential ramifications of filing a proof of claim on account of a time-barred debt/claim.

[1] A debt collector under the FDCPA is any person who, inter alia , “regularly collects . . . debts owed or due or asserted to be owed or due another.”  15 U.S.C. § 1692a.

[2] See 15 U.S.C. § 1692k.

[3] 15 U.S.C. §§ 1692e, 1692f.  The FDCPA also prohibits, among other things, a debt collector’s false representation of “the character, amount, or legal status of any debt” or “[t]he threat to take any action that cannot legally be taken or that is not intended to be taken.”  15 U.S.C. 1692e.

[4] See Crawford v. LVNV Funding, LLC , 758 F.3d 1254, 1259–60 (11th Cir 2014) (collecting cases).

[5] The “least sophisticated consumer” test requires a court to consider not whether a particular plaintiff was deceived or misled, but “whether the least sophisticated consumer would have been deceived by the debt collector’s conduct.” Id. at 1258 (quoting Jeter v. Credit Bureau, Inc. , 760 F.2d 1168 (11th Cir. 1985)) (internal quotation marks omitted).

[6] Id. at 1261–62.

[7] See id. at 1262 n.7 (recognizing split amongst appellate courts on the issue).

[8] Neal v. Atlas Acquisitions, LLC , No. 3:14-cv-1113-J-34PDB, 2015 WL 5687785, at *3–7 (M.D. Fla. Sept. 25, 2015).  The Neal court expressly limited its holding to the specific facts before it, stating “the Bankruptcy Code precludes an FDCPA claim based on these specific facts.”