Midland Funding LLC v. Johnson: OK to file Proof of Claim on Time Barred Debt

Today, May 15, 2017, the Supreme Court of the United States decided Midland Funding, LLC v. Johnson, 581 U.S. ___ (2017).

Holding: The filing of a proof of claim that is obviously time barred is not a false, deceptive, misleading, unfair or unconscionable debt-collection practice within the meaning of the Fair Debt Collection Practices Act.

Midland Funding filed a proof of claim in Johnson’s Chapter 13 bankruptcy case. It asserted that Johnson owed Midland debt on a credit card. The last time any charge appeared on Johnson’s account was more than 10 years ago. The relevant statute of limitations under Alabama law is six years. Johnson objected to the claim, and the Bankruptcy Court disallowed it.

Johnson sued Midland, claiming that its filing a proof of claim on an obviously time-barred debt was “false,” “deceptive,” “misleading,” “unconscionable,” and “unfair” within the meaning of the Fair Debt Collection Practices Act, 15 U. S. C. §§1692e, 1692f. The District Court held that the Act did not apply and dismissed the suit. The Eleventh Circuit reversed. The Supreme Court reversed, holding the filing of a proof of claim on a time barred debt is not a false, deceptive, misleading, unfair or unconscionable debt collection within the meaning of the Fair Debt Collection Practices Act.

While the decision has not been published yet, the Syllabus containing the decision can be viewed at https://www.supremecourt.gov/opinions/16pdf/16-348_h315.pdf