The U.S. Supreme Court handed debt collectors a victory in its recent decision in Midland Funding LLC v. Aleida Johnson.The Court held debt collectors do not face liability under the Fair Debt Collection Practices Act (“FDCPA”) for filing a claim in bankruptcy seeking to recover a stale debt. The Court’s decision reversed the Eleventh Circuit Court of Appeals, which had ruled that the debt collector in the case could be held liable for attempting to collect a credit card debt in bankruptcy despite the fact that the debt was nearly 11 years old, and any state court actions to collect on the debt had become time-barred by a six-year statute of limitations. The Supreme Court’s decision resolves the circuit split created by the Eleventh Circuit’s decision, and provides a significant measure of protection to the debt buying industry, whose business model was placed at risk. The Supreme Court’s decision is significant because: 1) it clears up the uncertainty created by the prior Eleventh Circuit decision, and 2) it provides some security to debt buyers, whose businesses often include the purchase of time-barred debts.The decision does not, however, appear to offer a significant exception to the consumer-friendly nature of the FDCPA…. Read full this story
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