Wednesday, July 13, 2016

Eighth Circuit Rejects Crawford Decision on Stale Claims

Stephen W. Sather
Barron & Newburger, P.C.
Austin, TX

Creating a circuit split, the Eighth Circuit has rejected the Eleventh Circuit's Crawford ruling that filing a time-barred claim violates the FDCPA.    Nelson v. Midland Credit Management, Inc., No. 15-2984 (8th Cir. 7/11/16).

What Happened

In a scenario that has played out dozens of times in the past two years, a debtor filed chapter 13 and a creditor filed a proof of claim on a debt that was outside the statute of limitations.   Rather than simply objecting to the claim, the Debtor filed suit for violation of the FDCPA.   The District Court dismissed the case for failure to state a cause of action, resulting in an appeal to the Court of Appeals.   The Eighth Circuit affirmed.

How the Court Ruled

Under the FDCPA, a debt collector is not prohibited from attempting to collect a debt which is beyond the statute of limitations.   However, the debt collector cannot file suit or threaten to file suit.  In Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11th Cir. 2014), the Eleventh Circuit found that filing a proof of claim was similar to filing suit to collect a debt.    The Eighth Circuit disagreed, distinguishing Crawford in four short paragraphs.