Alexandria, Va. — An article in the November edition of the ABI Journal backs the view that the Fair Debt Collection Practices Act (FDCPA) applies to bankruptcy claims filed by debt collectors beyond the applicable statue of limitations. “Instead of conflicting with the Code, the application of the FDCPA in the case of ‘stale’ claims complements the bankruptcy-claims process and protects the integrity of a system that allocates a debtor’s scarce resources among creditors with legally enforceable claims,” write James Haller of the Law Offices of Mueller & Haller LLC (Belleville, Ill.) and Tara Twomey of the National Consumer Law Center/National Consumer Bankruptcy Rights Center (Carmel, Calif.) in their article, “Debt Collectors Should Not Get a Free Pass in Bankruptcy.”
Haller and Twomey write that the issue of whether debt collectors violate the FDCPA by filing a stale claim in a bankruptcy case is currently on appeal in multiple circuits. “The Bankruptcy Code’s permissive language does not authorize conduct that is otherwise prohibited by the FDCPA,” according to the authors. “Furthermore, the fact that debt collectors are singled out for additional regulation does not create a conflict; it reflects Congress’s considered judgment that this particular group must be restricted in ways that do not affect ordinary creditors.”
The bankruptcy claims process is designed to run fairly and efficiently by setting presumptions in favor of the validity of claims in order to expedite claims resolution, according to Haller and Twomey. “It is antithetical to the efficient operation of the system to allow debt collectors to engage in the pointless exercise of filing proofs of claim for debt obligations that are legally unenforceable with the expectation that debtor’s counsel, the chapter 13 trustee or the U.S. Trustee Program will spend valuable time and resources to object to that claim,” Haller and Twomey write. “Congress intended the FDCPA to fill the gaps of other laws, and it does exactly that: It prevents debt collectors from abusing the court system, including the bankruptcy courts.”
To obtain a copy of “Debt Collectors Should Not Get a Free Pass in Bankruptcy,” published in the November issue of the ABI Journal, please contact John Hartgen at 703-894-5935 or via email at jhartgen@abiworld.org.
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 12,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abi.org/education-events.