Bankruptcy News: Debt Collectors Win Victory in U.S. Supreme Court • ATL Law - Atlanta Bankruptcy & Family Law Firm
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Bankruptcy News: Debt Collectors Win Victory in U.S. Supreme Court
Our Atlanta bankruptcy firm helps clients who are faced with mounting debt. In many cases, the debts are so old that they are no longer collectible under the Georgia statute of limitations — which is usually six years from the last payment date. Furthermore, when a creditor tries to collect a debt which is time-barred, not only do they lose, but they also violate the Fair Debt Collection Practices Act (FDCPA). This means that the debtor might actually be able to collect damages.
What has changed?
This week, however, the U.S. Supreme Court issued a ruling which might embolden debt collectors to dust off their old files and try one more shot at collecting. In Midland Funding, LLC v. Johnson, 2017 WL 2039159 (May 15, 2017) (case no. 16-348), the Court, in a 5-3 decision in which Justice Gorsuch did not participate, analyzed the law when a creditor files a proof of claim in a Chapter 13 bankruptcy for a time-barred debt. The 11th Circuit Court of Appeals had previously held that this action, like filing or threatening to file a lawsuit to collect such a debt, was improper and violated the FDCPA.
But in a chapter 13 bankruptcy, the Supreme Court held that built in protections of lawyers and procedures protect the debtor, making the collection efforts less unconscionable and therefore more palatable. In short, they now allow a creditor to file a claim for a debt previously noncollectable outside the bankruptcy realm, merely because the debtor retains a right to object to it.
How can debtors protect themselves?
The Midland Funding v. Johnson holding means that debtors, especially those who file a chapter 13 bankruptcy, have to be more diligent than ever to make certain that their debt collectors are following the rules. Now, more than ever, it is critical to have a competent and careful attorney on your side when you file a chapter 13 bankruptcy. Indeed, the Supreme Court’s ruling makes the assumption that all debtors have such counsel looking over the claims of their creditors.
If you face mounting debt and think a chapter 13 bankruptcy might be right for you, call the lawyers at MyATLlaw for a free consultation.
Written by: Howard P. Slomka, Esq.