Debt collector did not violate the FDCPA by filing a Proof of Claim that was subject to a Limitation Defense

The Chapter 13 debtor in In re LaGrone, Bankruptcy No. 13-B-21423; Adversary No. 14-A-00587, (Bankr. N.D. Ill. Jan. 21, 2015) brought an adversary proceeding against debt collector alleging that the debt collector violated the Fair Debt Collections Practices Act (FDCPA) when the debt collector filed a proof of claim on a consumer debt that, for collection purposes, was outside of the relevant Illinois statute of limitations. Specifically the debtor claimed that the debt collector made false representations, threatened illegal action and used deceptive, unfair or unconscionable means of collection. The debt collector moved to dismiss arguing that, although prior decisions in consumer collection actions have held that, a debt collector violate[s] the FDCPA by filing a lawsuit against the [debtor] after the statute of limitations has expired, those decisions did not apply to a debt collector’s proof of claim in bankruptcy. The court agreed. Declining to interpret the FDCPA as having the same effect on bankruptcy claims that it has on civil actions, the court held that, [because] a debtor in bankruptcy is not in the position of a consumer facing a collection lawsuit, the [lone] act of filing a proof of claim subject to a limitation defense does not does not [trigger] a violation of the FDCPA. The court reasoned that unlike a debtor in a collection lawsuit, a debtor in bankruptcy has the benefit of a trustee to examine proofs of claims and object to any claim that is improper. Additionally, a debtor in bankruptcy is more likely to be represented by an attorney who could advise the debtor about the existence of a statute of limitations defense and file an objection to a claim, if the trustee does not.

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