The Maine Bankruptcy Court recently ruled that filing time barred proofs of claim in a bankruptcy case are not violations of the Fair Debt Collection Practices Act. Creditors in the Chapter 13 case of In re Martel filed 3 proofs of claim seeking to collect funds in the bankruptcy case on debts that were time barred for collection under state law. The Debtors asserted that the time barred claims were violations of the FDCPA. The Defendants asserted that the FDCPA was not implicated by the filing of time barred proofs of claim, and that the Bankruptcy Code preempted the FDCPA.
The Bankruptcy Court concluded that the Bankruptcy Code did not preempt the FDCPA (thereby allowing FDCPA claims to be asserted in other bankruptcy cases), but the time barred claims could be filed as proofs of claim in bankruptcy cases. There is a difference of opinion among the Circuit Courts of Appeal, and it will be an issue of first impression in the First Circuit. Both Debtors and Creditors are requesting the First Circuit to take the case on appeal directly, without the necessity of an intermediary appeal to the US District Court or Bankruptcy Appellate Panel. Assuming the First Circuit agrees to hear the direct appeal, this issue of law could be decided within the next 12 months.