Chaille Dubois v. Atlas Acquisitions LLC

Filing

PUBLISHED AUTHORED OPINION filed. Originating case number: 15-00110,14-28589. [999916978]. [15-1945]

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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 15-1945

In Re: ERIC DUBOIS,
Debtor.
---------------------CHAILLE DUBOIS, f/k/a Chaille Gaines, f/k/a Candace DuBois,
f/k/a Candace Gaines, f/k/a Candi Gaines, f/k/a Candi
DuBois; KIMBERLY ADKINS,
Plaintiffs - Appellants,
v.
ATLAS ACQUISITIONS LLC,
Defendant – Appellee,
and
TIMOTHY P. BRANIGAN; NANCY SPENCER GRISBY,
Trustees.

Appeal from the United States Bankruptcy Court for the District
of Maryland, at Greenbelt.
Thomas J. Catliota, Bankruptcy
Judge. (15-00110; 14-28589)

Argued:

May 10, 2016

Decided:

Before DIAZ, FLOYD, and THACKER, Circuit Judges.

August 25, 2016

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Affirmed by published opinion.
Judge Floyd wrote the majority
opinion, in which Judge Thacker joined.
Judge Diaz wrote a
dissenting opinion.

ARGUED: Morgan William Fisher, LAW OFFICES OF MORGAN FISHER LLC,
Annapolis, Maryland, for Appellants.
Donald S. Maurice, Jr.,
MAURICE WUTSCHER, LLP, Flemington, New Jersey, for Appellee. ON
BRIEF: Courtney L. Weiner, LAW OFFICES OF MORGAN FISHER LLC,
Washington, D.C., for Appellants.
Alan C. Hochheiser, BUCKLEY
KING, LPA, Cleveland, Ohio, for Appellee.

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FLOYD, Circuit Judge:
Appellants

Kimberly

Adkins

and

Chaille

Dubois

filed

separate Chapter 13 bankruptcy petitions in the Bankruptcy Court
for the District of Maryland.

Appellee Atlas Acquisitions LLC

(Atlas) filed proofs of claim in their bankruptcy cases based on
debts that were barred by Maryland’s statute of limitations. 1
The issue on appeal is whether Atlas violated the Fair Debt
Collection Practices Act (FDCPA) by filing proofs of claim based
on time-barred debts.

We hold that Atlas’s conduct does not

violate the FDCPA, and affirm the bankruptcy court’s dismissal
of Appellants’ FDCPA claims and related state law claim.

I.
The facts of Appellants’ cases are similar.
for Chapter 13 bankruptcy on August 29, 2014.
proofs of claim in her case.

Adkins filed

Atlas filed two

The first proof of claim indicated

that Adkins owed Atlas $184.62 based on a loan that originated
with payday lender Check N Go and that Atlas purchased from
Elite Enterprise Services, LLC (Elite Enterprise) on September

1

“A proof of claim is a form filed by a creditor in a
bankruptcy proceeding that states the amount the debtor owes to
the creditor and the reason for the debt.”
Covert v. LVNV
Funding, LLC, 779 F.3d 242, 244 n.1 (4th Cir. 2015).

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The proof of claim identified the last transaction

date on the account as May 19, 2009.
claim
payday
Elite

was

for

lender

$390.00
Impact

Enterprise

identified
September

the
10,

on
last

2009.

based

Cash

on

a

loan

that

and

USA

November

that

Atlas

18,

2014.

transaction
It

is

Atlas’s second proof of

The

date

undisputed

on

originated

with

purchased

from

proof

that

that

both

of

claim

account
debts

as
were

beyond Maryland’s three-year statute of limitations when Atlas
purchased

and

bankruptcy case.

attempted

to

assert

the

debts

in

Adkins’s

See Md. Code Ann., Cts. & Jud. Proc. § 5-101.

Adkins neither listed the debts on her bankruptcy schedules nor
sent a notice of bankruptcy to Atlas.
Dubois filed for Chapter 13 bankruptcy on December 6, 2014.
Atlas filed a proof of claim for $135.00 based on a loan that
originated with payday lender Iadvance and that Atlas purchased
from Elite Enterprise on January 5, 2015.

The proof of claim

identified the last transaction date on the account as October
18, 2008.

It is undisputed that this debt was also beyond

2

Atlas asks the Court to strike any allegation that the
loans in this appeal originated with payday lenders.
However,
the proofs of claim attached to Appellants’ complaints indicate
that Atlas itself designated the debts “payday.”
See J.A. 55,
140. Accordingly, we find this fact sufficiently alleged. See
Goines v. Valley Cmty. Servs. Bd., No. 15-1589, ---F.3d---, 2016
WL 2621262, at *2 (4th Cir. May 9, 2016) (explaining that on
motion to dismiss, courts may consider documents attached to
complaint as exhibits).

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Maryland’s
attempted

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statute
to

of

assert

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limitations
the

debt

in

when

Atlas

Dubois’s

purchased

bankruptcy

and

case.

Dubois did not list the debt on her bankruptcy schedules nor did
she send a notice of bankruptcy to Atlas.
Adkins

and

against Atlas.
barred

and

filing

proofs

Dubois

filed

separate

adversary

complaints

Both objected to Atlas’s claims as being time-

further
of

alleged
claim

on

that

Atlas

stale

violated

debts.

the

FDCPA

Appellants

by

sought

disallowance of Atlas’s claims as well as damages, attorney’s
fees, and costs under the FDCPA. 3
Atlas conceded that its claims were based on time-barred
debts

and

stipulated

to

their

disallowance.

However,

Atlas

moved to dismiss Appellants’ FDCPA claims under Federal Rule of
Civil Procedure 12(b)(6) for failure to state a claim upon which
relief

could

be

granted.

See

Fed.

R.

Bankr.

P.

7012(b)

(incorporating Rule 12(b)(6) into adversary proceedings).

After

hearing

court

consolidated

oral

arguments,

the

bankruptcy

concluded that filing a proof of claim does not constitute debt
collection activity within the meaning of the FDCPA and granted
Atlas’s motion to dismiss.

Pursuant 28 U.S.C. § 158(d)(2), we

3

Dubois additionally alleged that Atlas violated the
Maryland Consumer Debt Collection Act (MCDCA).
Md. Code Ann.,
Com. Law § 14-201, et seq. The parties do not analyze the MCDCA
separately from the FDCPA. Accordingly, neither do we.

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permitted Appellants to appeal the bankruptcy court’s decision
directly

to

this

Court.

We

review

the

bankruptcy

court’s

dismissal of Appellants’ claims under Rule 12(b)(6) de novo.
See, e.g., In re Mwangi, 764 F.3d 1168, 1173 (9th Cir. 2014); In
re McKenzie, 716 F.3d 404, 412 (6th Cir. 2013).

II.
Before addressing the substance of Appellants’ claims, we
provide a brief overview of the relevant statutes in this case:
the Bankruptcy Code (the “Code”) and the FDCPA.

A.
“The principal purpose of the Bankruptcy Code is to grant a
‘fresh start’ to the ‘honest but unfortunate debtor.’”

Marrama

v. Citizens Bank, 549 U.S. 365, 367 (2007) (quoting Grogan v.
Garner, 498 U.S. 279, 286, 287 (1991)).

Through bankruptcy, the

debtor’s assets are collected for equitable distribution among
creditors and his remaining debts are discharged.

See Covert v.

LVNV Funding, LLC, 779 F.3d 242, 248 (4th Cir. 2015); In re
Jahrling,

816

F.3d

921,

924

(7th

Cir.

2016).

A

bankruptcy

debtor must file with the bankruptcy court a list of creditors,
a schedule of assets and liabilities, and a statement of the
debtor’s financial affairs.

11 U.S.C. § 521(a)(1).

"[B]eing

all-inclusive on the schedules is consistent with the Code’s
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principle of honest and full disclosure.”
B.R. 670, 676 (Bankr. D.S.C. 2015).

In re Vaughn, 536

Scheduling a debt notifies

the creditor of the bankruptcy and of the creditor's opportunity
to file a proof of claim asserting a right to payment against
the debtor’s estate.

See id. at 679; 11 U.S.C. § 501(a).

The bankruptcy court may “allow” or “disallow” claims from
sharing in the distribution of the bankruptcy estate.
§ 502.

11 U.S.C.

In Chapter 13 proceedings, allowed claims are typically

paid, either in whole or in part, out of the debtor’s future
earnings pursuant to a repayment plan proposed by the debtor and
confirmed by the bankruptcy court.

See id. § 1322(a)(1); 4-501

Collier on Bankruptcy ¶ 501.01 (Collier).

Upon completion of

all payments under the plan, the bankruptcy court “grant[s] the
debtor a discharge of all debts provided for by the plan or
disallowed.”

11 U.S.C. § 1328(a).

Thus, at the end of the

process the debtor receives the “fresh start” contemplated by
the Bankruptcy Code.

B.
Congress
collection

enacted

practices

the
and

FDCPA

to

to

ensure

eliminate
that

debt

abusive

debt

collectors

who

refrain from such practices are not competitively disadvantaged.
15 U.S.C. § 1692(a), (e).

The FDCPA regulates the conduct of

“debt collectors,” defined to include “any person who uses any
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of

interstate

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commerce

or

the

mails

in

any

business the principal purpose of which is the collection of any
debts,

or

who

regularly

collects

or

attempts

to

collect,

directly or indirectly, debts owed or due or asserted to be owed
or due another.”

Id. § 1692a(6).

Among other things, the FDCPA

prohibits debt collectors from using “any false, deceptive, or
misleading

representation

collection

of

any

or

debt,”

means
and

in

connection

from

the

“unfair

using

with

or

unconscionable means to collect or attempt to collect any debt.”
Id. §§ 1692e-1692f.

The statute provides a non-exhaustive list

of conduct that is deceptive or unfair (e.g., falsely implying
that the debt collector is affiliated with the United States,
id. § 1692e(1)).

Debt

collectors

who

violate

the

FDCPA

are

liable for actual damages, statutory damages of up to $1,000,
and attorney’s fees and costs.

See id. § 1692k(a).

C.
Federal courts have consistently held that a debt collector
violates the FDCPA by filing a lawsuit or threatening to file a
lawsuit to collect a time-barred debt.
Funding,

LLC,

(collecting

758

cases),

F.3d

1254,

cert.

denied,

See Crawford v. LVNV

1259-60
135

S.

(11th
Ct.

Cir.
1844

2014)
(2015).

Appellants contend that filing a proof of claim on a time-barred
debt in a bankruptcy proceeding similarly violates the FDCPA.
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Atlas

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counters

that

filing

a

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proof

of

claim

is

not

debt

collection activity and is therefore not subject to the FDCPA.
Alas further argues that, even if the FDCPA applies, filing a
proof

of

claim

provisions.

on

a

time-barred

debt

does

not

violate

its

These arguments are addressed in turn.

III.
Atlas does not dispute that it is a debt collector but
argues that filing a proof of claim does not constitute debt
collection

activity

regulated

by

the

FDCPA.

See

15

U.S.C.

§ 1692e (prohibiting deceptive or misleading representations “in
connection

with

(prohibiting

the

collection

unfair

or

of

claim

is

merely

bankruptcy process.”

any

unconscionable

attempt to collect any debt”).
proof

of

a

debt”);
means

id.

“to

§

1692f

collect

or

Instead, Atlas contends that a
“request

to

participate

in

the

Appellee’s Br. 20.

Determining whether a communication constitutes an attempt
to collect a debt is a “commonsense inquiry” that evaluates the
“nature of the parties’ relationship,” the “[objective] purpose
and

context

of

the

communication[],”

communication includes a demand for payment.

and

whether

the

Gburek v. Litton

Loan Servicing LP, 614 F.3d 380, 385 (7th Cir. 2010); see also
Olson v. Midland Funding, LLC, 578 F. App’x 248, 251 (4th Cir.
2014)

(citing

Gburek

factors

approvingly).
9

Here,

the

“only

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relationship between [the parties] [is] that of a debtor and
debt collector.”

Olson, 578 F. App’x at 251.

Moreover, the

“animating purpose” in filing a proof of claim is to obtain
payment

by

sharing

bankruptcy estate.

in

the

distribution

of

the

debtor’s

See Grden v. Leikin Ingber & Winters PC, 643

F.3d 169, 173 (6th Cir. 2011); 4-501 Collier ¶ 501.01.

This

fits squarely within the Supreme Court’s understanding of debt
collection for purposes of the FDCPA.

See Heintz v. Jenkins,

514 U.S. 291, 294 (1995) (explaining that in ordinary English,
an attempt to “collect a debt” is an attempt “to obtain payment
or liquidation of it, either by personal solicitation or legal
proceedings”
1990))).

(quoting

Black’s

Law

Dictionary

(6th

ed.

Precedent and common sense dictate that filing a proof

of claim is an attempt to collect a debt.
explicit

263

demand

for

payment

does

not

The absence of an

alter

that

conclusion,

Gburek, 614 F.3d at 382, nor does the fact that the bankruptcy
court may ultimately disallow the claim.
Atlas argues that treating a proof of claim as an attempt
to

collect

automatic

a

debt

stay

would

conflict

provision.

The

with

the

automatic

Bankruptcy

stay

Code’s

provides

that

filing a bankruptcy petition “operates as a stay” of “any act to
collect,
arose

assess,

before

§ 362(a)(6).

or

the

recover

a

claim

commencement

of

against
the

the

case.”

debtor
11

that

U.S.C.

Atlas argues that if filing a proof of claim were
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collect

debt,

then

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such

automatic stay, “an absurd result.”

filing

would

violate

the

Appellee’s Br. 21.

Atlas’s quandary is easily resolved as the automatic stay
simply bars actions to collect debt outside of the bankruptcy
proceeding.

See, e.g., Cent. States, Se. & Sw. Areas Pension

Fund v. Basic Am. Indus., Inc., 252 F.3d 911, 918 (7th Cir.
2001) (“‘[D]emanding’ payment from a debtor in bankruptcy other
than in the bankruptcy proceeding itself is normally a violation
of the automatic stay”); Campbell v. Countrywide Home Loans,
Inc., 545 F.3d 348, 354 (5th Cir. 2008) (explaining that the
automatic stay “merely suspends an action to collect the claim
outside the procedural mechanisms of the Bankruptcy Code”).

The

automatic stay helps channel debt collection activity into the
bankruptcy process.

It does not strip such activity of its debt

collection nature for purposes of the FDCPA.
Finally, Atlas argues that filing a proof of claim is not
an

attempt

to

collect

debt

because

the

proof

of

claim

is

directed to the bankruptcy court and trustee rather than to the
debtor.

However, collection activity directed toward someone

other than the debtor may still be actionable under the FDCPA.
See, e.g., Sayyed v. Wolpoff & Abramson, 485 F.3d 226, 232-33
(4th

Cir.

2007)

(finding

that

FDCPA

“plainly”

applies

to

communications made by debt collector to debtor’s counsel rather
than debtor); Horkey v. J.V.D.B. & Assocs., Inc., 333 F.3d 769,
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774 (7th Cir. 2003) (finding that debt collector’s phone call to
debtor’s co-worker was “in connection with the collection of a
debt” where purpose of the call was to induce debtor to settle
her

debt).

bankruptcy

Although
court,

it

a
is

proof
done

of
with

payment from the debtor’s estate.

claim
the

is

filed

purpose

of

with

the

obtaining

That the claim is paid by the

debtor’s estate rather than the debtor personally is irrelevant
for

purposes

of

the

FDCPA.

See

15

U.S.C.

§§

1692e,

1692f

(prohibiting the use of deceptive or unfair means to collect
“any debt,” without specifying a payor).
Accordingly, we find that filing a proof of claim is debt
collection activity regulated by the FDCPA.

IV.
We next consider whether filing a proof of claim based on a
debt

that

violates

is
the

beyond
FDCPA.

the

applicable

Deciding

this

statute
issue

of

limitations

requires

closer

examination of the claims process in bankruptcy.
The Federal Rules of Bankruptcy Procedure specify the form,
content, and filing requirements for a valid proof of claim.
See, e.g., Fed. R. Bankr. P. 3001.

A properly filed proof of

claim is prima facie evidence of the claim’s validity, and the
claim is “deemed allowed” unless “a party in interest” objects.
11 U.S.C. § 502.

The bankruptcy trustee and debtor are parties
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in interest who may object. 4

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Indeed, the trustee has a statutory

duty to “examine proofs of claims and object to the allowance of
any claim that is improper.”

Id. § 704(a)(5).

If objected to, the Code disallows claims based on timebarred debts.

See id. § 502(b)(1) (stating that a claim shall

be disallowed if it is “unenforceable against the debtor . . .
under any agreement or applicable law”); id. § 558 (stating that
the bankruptcy estate has “the benefit of any defense available
to the debtor . . . including statutes of limitation”).

As

previously noted, debts that are “provided for by the plan or
disallowed under section 502” may be discharged.

Id. § 1328

(emphasis added).
Appellants

contend

that

the

FDCPA

should

be

applied

to

prohibit debt collectors from filing proofs of claim on timebarred debts.
“claim”
filing

within
claims

Appellants argue that a time-barred debt is not a
the
on

meaning

of

time-barred

the
debts

4

Bankruptcy
is

an

Code

abusive

and

that

practice

While the parties do not address the issue, it appears
that creditors are also parties in interest who may object to a
claim filed by another creditor.
See, e.g., Adair v. Sherman,
230 F.3d 890, 894 n.3 (7th Cir. 2000) (“Parties in interest
include not only the debtor, but anyone who has a legally
protected interest that could be affected by a bankruptcy
proceeding. Therefore, if one creditor files a potentially
fraudulent proof of claim, other creditors have standing to
object to the proof of claim.” (citation omitted)); In re Varat
Enters., Inc., 81 F.3d 1310, 1317 n.8 (4th Cir. 1996) (“All
creditors of a debtor are parties in interest.”).

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because such claims are seldom objected to and therefore receive
payment

from

the

bankruptcy

estate

debtor and other creditors.

to

the

detriment

of

the

Atlas, meanwhile, argues that a

time-barred debt is a valid “claim” and that filing such a claim
should not be prohibited because only debts that are treated in
the bankruptcy system may be discharged.

A.
The Bankruptcy Code defines the term “claim” broadly to
mean a “right to payment, whether or not such right is reduced
to

judgment,

matured,

liquidated,

unmatured,

unliquidated,

disputed,

secured, or unsecured.”

undisputed,

fixed,

contingent,

legal,

11 U.S.C. § 101(5)(A).

equitable,

By using the

“broadest possible definition,” the Code “contemplates that all
legal

obligations

of

the

debtor,

no

matter

how

remote

or

contingent, will be able to be dealt with in the bankruptcy
case,”

thereby

relief.”

providing

the

debtor

the

“broadest

possible

H.R. Rep. No. 95–595, p. 309 (1977); S. Rep. No. 95–

989, p. 22 (1978).
“[W]hen the Bankruptcy Code uses the word claim . . . it is
usually referring to a right to payment recognized under state
law.”

Travelers Cas. & Sur. Co. of Am. v. Pac. Gas & Elec. Co.,

549 U.S. 443, 451 (2007) (quotation omitted).

Under Maryland

law, the statute of limitations “does not operate to extinguish
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[a] debt, but to bar the remedy.”

Potterton v. Ryland Grp.,

Inc., 424 A.2d 761, 764 (Md. 1981) (quotation omitted); see also
Higginbotham v. Pub. Serv. Comm’n of Md., 985 A.2d 1183, 1191
(Md. 2009) (“[W]e have regarded limitations as not denying the
plaintiff’s

right

of

right.”

(quotation

revived

if

existence.

the

action,

but

omitted)).

debtor

only

Indeed,

sufficiently

the
a

exercise

stale

debt

acknowledges

of
may

the

the
be

debt’s

Potterton, 424 A.2d at 764; see also FTC, Time-

Barred Debts (July 2013), https://www.consumer.ftc.gov/articles/
0117-time-barred-debts (“Although the [debt] collector may not
sue you to collect [a time-barred] debt, you still owe it.

The

collector can continue to contact you to try to collect . . . .
[and] [i]n some states, if you pay any amount on a time-barred
debt or even promise to pay, the debt is ‘revived.’”) (saved as
ECF

opinion

attachment).

Thus,

under

Maryland

law,

a

time-

barred debt still constitutes a “right to payment” and therefore
a “claim” that the holder may file under the Bankruptcy Code. 5

5

Appellants suggest that “by filing proofs of claim on
time-barred debt, Atlas is trying to trick debtors into
unwittingly reviving the statute [of limitations].” Appellants’
Reply Br. 4.
Regardless of whether this is Atlas’s intent, it
is difficult to see how a creditor’s filing a proof of claim
would constitute acknowledgement of the debt by the debtor,
particularly when there is persuasive authority that a debtor
does not revive a time-barred debt by listing it in his
bankruptcy schedules.
See, e.g., Biggs v. Mays, 125 F.2d 693,
697-98 (8th Cir. 1942); In re Povill, 105 F.2d 157, 160 (2d Cir.
1939).

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Appellants

note

that

a

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debt

must

be

enforceable

to

constitute a claim, citing the Supreme Court’s statement that
“[t]he plain meaning of a ‘right to payment’ is nothing more nor
less than an enforceable obligation.”

Pa. Dep’t of Pub. Welfare

v. Davenport, 495 U.S. 552, 559 (1990).
the

Supreme

Court’s

statement

to

mean

enforceable in court to be a claim.
treats

debts

that

are

However, we do not read

“contingent”

that

a

debt

must

be

Indeed, the Bankruptcy Code
or

“unmatured”

as

claims

notwithstanding that such debts are not presently enforceable in
court.

11 U.S.C. § 101(5)(A).

Furthermore, in Davenport, the

Supreme Court found restitution orders to be claims even though
“neither the Probation Department nor the victim can enforce
restitution obligations in civil proceedings.”
Instead,

such

obligations

are

enforced

by

495 U.S. at 558.
the

“substantial

threat of revocation of probation and incarceration.”

Id.

It is also notable that while the Bankruptcy Code provides
that time-barred debts are to be disallowed, see, e.g., 11 U.S.C
§ 558, the Code nowhere suggests that such debts are not to be
filed in the first place.
recently

amended

to

Indeed, the Bankruptcy Rules were

facilitate

the

assessment

of

a

claim’s

timeliness by requiring that claims such as the ones at issue in
this appeal be filed with a statement setting forth the last
transaction date, last payment date, and charge-off date on the
account.

Fed. R. Bankr. P. 3001, advisory committee notes to
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2012 Amendments (discussing filing requirements for claims based
on open-end or revolving consumer credit agreements).

This Rule

suggests the Code contemplates that untimely debts will be filed
as claims but ultimately disallowed.

Lastly, excluding time-

barred debts from the scope of bankruptcy “claims,” and thus
excluding them from the bankruptcy process, would frustrate the
Code’s “intended effect to define the scope of the term ‘claim’
as broadly as possible,” 2-101 Collier ¶ 101.05, and thereby
provide the debtor the broadest possible relief.
we

conclude

that

when

the

statute

of

Accordingly,

limitations

does

not

extinguish debts, a time-barred debt falls within the Bankruptcy
Code’s broad definition of a claim.

B.
Next, we consider whether filing a proof of claim on a
time-barred

debt

violates

the

FDCPA

Bankruptcy Code permits such filing.

notwithstanding

that

the

As noted above, the FDCPA

has been interpreted to prohibit filing a lawsuit on a timebarred debt.

The rationale has been explained as follows:

As with any defendant sued on a stale claim, the
passage of time not only dulls the consumer’s memory
of the circumstances and validity of the debt, but
heightens the probability that she will no longer have
personal records detailing the status of the debt.
Indeed, the unfairness of such conduct is particularly
clear in the consumer context where courts have
imposed a heightened standard of care—that sufficient
to protect the least sophisticated consumer. Because
17

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Pg: 18 of 34

few unsophisticated consumers would be aware that a
statute of limitations could be used to defend against
lawsuits based on stale debts, such consumers would
unwittingly acquiesce to such lawsuits. And, even if
the consumer realizes that she can use time as a
defense, she will more than likely still give in
rather than fight the lawsuit because she must still
expend energy and resources and subject herself to the
embarrassment of going into court to present the
defense; this is particularly true in light of the
costs of attorneys today.
Kimber v. Fed. Fin. Corp., 668 F. Supp. 1480, 1487 (M.D. Ala.
1987); see also Crawford, 758 F.3d at 1260; Phillips v. Asset
Acceptance, LLC, 736 F.3d 1076, 1079 (7th Cir. 2013). 6
We

note

at

the

outset

a

unique

consideration

in

the

bankruptcy context: if a bankruptcy proceeds as contemplated by
the Code, a claim based on a time-barred debt will be objected
to

by

thereby

the

trustee,

stopping

the

disallowed,
creditor

6

and

from

ultimately

engaging

in

discharged,
any

further

The Eleventh Circuit in Crawford is the only court of
appeals to hold that filing a proof of claim on a time-barred
debt in a Chapter 13 proceeding violates the FDCPA. 758 F.3d at
1256-57.
The
Eighth
Circuit
has
“reject[ed]
extending
the FDCPA to time-barred proofs of claim,” Nelson v. Midland
Credit Mgmt., Inc., No. 15-2984, 2016 WL 3672073, at *2 (8th
Cir. July 11, 2016), and the Second Circuit has broadly held
that “filing a proof of claim in bankruptcy court (even one that
is somehow invalid) cannot constitute the sort of abusive debt
collection practice proscribed by the FDCPA.”
Simmons v.
Roundup Funding, LLC, 622 F.3d 93, 95 (2d Cir. 2010).
Other
circuits are presently considering the issue. See, e.g., Owens
v. LVNV Funding, LLC, No 14-cv-02083, 2015 WL 1826005 (S.D. Ind.
Apr. 21, 2015), appeal docketed, No. 15–2044 (7th Cir. May 13,
2015); Torres v. Asset Acceptance, LLC, 96 F. Supp. 3d 541 (E.D.
Pa. 2015), appeal docketed, No. 15–2132 (3d Cir. May 13, 2015).

18

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collection activity. 7
claim

is

filed,

If the debt is unscheduled and no proof of

the

collector

may

filing

lawsuit.

a

Pg: 19 of 34

debt

lawfully

continues

pursue

This

is

to

exist

collection

and

activity

detrimental

to

the

the

debt

apart

from

debtor

and

undermines the bankruptcy system’s interest in “the collective
treatment of all of a debtor's creditors at one time.”
Bankr. L. & Prac. 3d § 3:9.

1 Norton

Clearly, then, when a time-barred

debt is not scheduled the optimal scenario is for a claim to be
filed and for the Bankruptcy Code to operate as written.
Appellants complain, however, that trustees often lack the
time and resources to examine each proof of claim and object to
those that are based on time-barred debts.
17-18

(explaining

trustees

to

that

manage

Maryland

approximately

has

only

5,000

See Appellants’ Br.
three

cases

per

Chapter
year,

approximately 10 proofs of claim filed in each case).
collectors

like

Atlas

purportedly

take

advantage

of

13
with
Debt

this

by

filing claims on stale debts in hopes that the claims will go
unnoticed and receive some payment from the bankruptcy estate.
When

successful,

these

debt

collectors

reduce

the

amount

of

money available to legitimate creditors and may sometimes cause
debtors to pay more into their Chapter 13 plans.
7

By contrast, raising a statute of limitations defense may
defeat a lawsuit to collect a time-barred debt but would not
extinguish the debt or necessarily prevent collection activity.

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We appreciate the harm that can be wrought if time-barred
claims go unnoticed.

However the solution, in our view, is not

to impose liability under the FDCPA that would categorically bar
the

filing

of

such

claims,

but

to

improve

administration such that it operates as written. 8

the

Code’s

This may be

accomplished, for example, by allocating additional resources to
trustees or through action of the United States Trustee, who
appoints

and

supervises

all

Chapter

13

trustees.

28

U.S.C.

§ 586.
Another consideration that counsels against finding FDCPA
liability is that, for most Chapter 13 debtors, the amount they
pay into their bankruptcy plans is unaffected by the number of
unsecured claims that are filed.
do

not

enter

unsecured

into

100

creditors

percent

receive

Chapter 13 debtors typically
repayment

only

plans;

partial

thus,

payment

of

their
their

claims, with the remainder being discharged.

See 8-1328 Collier

¶

chapter

1328.02

(“Congress

clearly

contemplated

13

plans

paying little or nothing on unsecured debts . . . .”).
additional

claims

are

filed,

unsecured

creditors

receive

As
a

smaller share of available funds but the total amount paid by

8

Indeed, if Appellants are correct that trustees are
failing to fulfill their statutory duty to examine and object to
improper claims, this is surely producing adverse consequences
beyond the context of time-barred debts.

20

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the debtor remains unchanged.

Pg: 21 of 34

Thus, from the perspective of

most Chapter 13 debtors, it may in fact be preferable for a
time-barred claim to be filed even if it is not objected to, as
the debtor will likely pay the same total amount to creditors
and the debt can be discharged.

See In re Gatewood, 533 B.R.

905, 909 (8th Cir. BAP 2015) (explaining that “debtors have less
at

stake

in

enforcement

claims

of

an

allowance

adverse

than

judgment

they
in

a

would

when

collection

facing
action”

because the allowance of additional claims would not affect the
total amount the debtor would pay). 9
Various

other

considerations

also

differentiate

filing

a

proof of claim on a time-barred debt from filing a lawsuit to
collect such debt.
like

the

ones

First, the Bankruptcy Rules require claims

filed

by

Atlas

to

accurately

state

the

last

transaction and charge-off date on the account, making untimely
claims easier to detect and relieving debtors from the burden of
producing

evidence

to

show

that

the

claim

is

time-barred. 10

9

As noted above, the FDCPA was enacted in part to protect
scrupulous debt collectors from unfair competition.
However,
bankruptcy creditors are sophisticated entities that may object
to improper claims.
Thus, we will not invoke the FDCPA solely
on their behalf when, as discussed above, there are reasons not
to do so on behalf of bankruptcy debtors.
10

There is no allegation that Atlas filed inaccurate proofs
of claim. A debt collector who supplies false dates to obscure
a claim’s staleness may well violate the FDCPA.
However, we
have no occasion to consider that issue today.

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Second, a bankruptcy debtor is protected by a trustee and often
by counsel who are responsible for objecting to improper claims
even if, as Appellants argue, they currently do not always do
so.

Third, unlike a debtor who is unwillingly sued, a Chapter

13 debtor voluntarily initiates the bankruptcy case, diminishing
concerns

about

the

embarrassment

the

debtor

may

feel

in

objecting to a stale claim.

In sum, the reasons why it is

“unfair”

sue

and

considerably

“misleading”
diminished

to

in

the

on

a

time-barred

bankruptcy

are

where

context,

debt

the

debtor has additional protections and potentially benefits from
having the debt treated in the bankruptcy process.
Lastly, Appellants concede that a debt collector would not
violate the FDCPA by filing a proof of claim on a time-barred
debt that the debtor had scheduled and did not designate as
“disputed.”

Appellants

explain

that

scheduling

a

debt

as

undisputed is an “invitation to participate” because it provides
“‘notice to a creditor that its debt will be paid . . . in
accordance

with

the

filed

proof

of

claim,

process, and other bankruptcy provisions.’”
n.14 (quoting Vaughn, 536 B.R. at 678).

claims

Appellants’ Br. 28

However, such notice is

sent whether a scheduled debt is disputed or not.
time-barred

debt

that

is

disputed

objection

is

less

Moreover, a

likely

to

be

inadvertently allowed.

Thus, we see no reason to attach FDCPA

liability

filed

to

a

claim

on
22

a

time-barred

debt

that

is

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scheduled as disputed.

Pg: 23 of 34

Finally, the interests in discharge and

collective treatment of claims discussed above convince us that
FDCPA

liability

should

not

attach

where

a

debtor

fails

to

schedule a time-barred debt.
We conclude that filing a proof of claim in a Chapter 13
bankruptcy based on a debt that is time-barred does not violate
the FDCPA when the statute of limitations does not extinguish
the debt. 11

V.
For the foregoing reasons, we affirm the district court’s
dismissal of Appellants’ FDCPA and MCDCA claims.
AFFIRMED

11

In light of this decision, we do not reach Atlas’s
argument that the Bankruptcy Code precludes the FDCPA and
preempts the MCDCA from applying to the filing of a proof of
claim.

23

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DIAZ, Circuit Judge, dissenting:
I join Part III of the majority opinion, which concludes
that

filing

a

proof

of

claim

is

debt-collection

activity

regulated by the Fair Debt Collection Practices Act (FDCPA), 15
U.S.C. § 1692 et seq.
And

while

I

agree

that

Atlas’s

time-barred

claim

is

a

“claim” under the Bankruptcy Code (as the majority concludes in
Part

IV.A),

I

cannot

consistent

with

the

Collection

Act

seq.). 1
and

agree
FDCPA

(MCDCA),

Md.

that
(or
Code

Atlas’s
the

Maryland

Ann.,

tries

to

collect

by

filing

proofs

Consumer

Law

is

Debt

§ 14-201

et

Bankruptcy

Code

automatically

11 U.S.C. § 502.

of

claim

in

their

As Atlas concedes, these claims should

fail—the debt is unenforceable in court.

claims.

Com.

conduct

Atlas buys the time-barred debt of people in bankruptcy

bankruptcy proceedings.

the

alleged

But, absent objection,

allows

all

properly

filed

So Atlas plays the odds, representing

itself as entitled to part of the debtors’ estates.

If someone

notices the claims and objects, as happened here, Atlas grins
sheepishly—“You

the

claim

is

Atlas

uses

the

bankruptcy court to garner a payoff on unenforceable debts.

In

meritless.

But

caught
if

the

me!”—and
claim

admits

slips

1

that

through,

I join the majority in analyzing the FDCPA and MCDCA
claims together, as the parties do.

24

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my view, this sharp practice is misleading and unfair to debtors
and other creditors, and it gives rise to a cause of action
under the FDCPA.
Moreover, I would hold that the Bankruptcy Code does not
impliedly repeal the FDCPA or preempt the MCDCA.

Accordingly, I

would vacate the opinion of the district court and remand for
further proceedings.

I.
The FDCPA aims to “protect[] consumers from abusive and
deceptive

practices

by

debt

collectors,

and . . .

debt collectors from competitive disadvantage.”

non-abusive

United States

v. Nat’l Fin. Servs., Inc., 98 F.3d 131, 135 (4th Cir. 1996).
The

statute

including

prohibits

the

use

of

a

wide

“any

variety
false,

of

collection

deceptive,

or

tactics,

misleading

representation or means” of debt collection, 15 U.S.C. § 1692e,
and “unfair or unconscionable means to collect or attempt to
collect any debt,” § 1692f.
Although the FDCPA enumerates specific examples of these
broad
general

prohibitions,

it

application.”

does

so

Id.

“[w]ithout
For

limiting

example,

“[t]he

[their]
false

representation of . . . the character, amount, or legal status
of any debt” is a specific violation of the general ban on
false, deceptive, or misleading representations.
25

§ 1692e(2)(A).

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But Congress chose not to limit the general prohibitions, to
“enable

the

courts,

where

appropriate,

to

proscribe

improper conduct which is not specifically addressed.”

other

Stratton

v. Portfolio Recovery Assocs., LLC, 770 F.3d 443, 450 (6th Cir.
2014) (quoting S. Rep. No. 95-382 at 4 (1977), as reprinted in
1977 U.S.C.C.A.N. 1695, 1698).
One such court-imposed proscription applies to lawsuits to
collect time-barred debt.

Crawford v. LVNV Funding, LLC, 758

F.3d 1254, 1259-60 & n.6 (11th Cir. 2014) (citing cases).
lawsuits
First,
point

raise

the
we

two

“least

view

major

concerns

sophisticated

FDCPA

in

the

consumer

consumer”—from

communications,

see

context.

whose

Russell

v.

Such

vantage
Absolute

Collection Servs., Inc., 763 F.3d 385, 394 (4th Cir. 2014)—may
be unaware of the existence of a statute-of-limitations defense
and

may

therefore

“unwittingly

acquiesce

to

such

lawsuits,”

Kimber v. Fed. Fin. Corp., 668 F. Supp. 1480, 1487 (M.D. Ala.
1987).

Second,

“the

passage

of

time

not

only

dulls

the

consumer’s memory of the circumstances and validity of the debt,
but heightens the probability that [the consumer] will no longer
have

personal

records

detailing

the

status

of

the

debt.”

Phillips v. Asset Acceptance, LLC, 736 F.3d 1076, 1079 (7th Cir.
2013) (quoting Kimber, 668 F. Supp. at 1487).
These

same

considerations

support

recognizing

FDCPA

liability for filing time-barred claims on unscheduled debts in
26

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bankruptcy. 2

Filed: 08/25/2016

Pg: 27 of 34

Crawford, 758 F.3d at 1260-61.

But see Nelson v.

Midland Credit Mgmt., Inc., No. 15-2984, 2016 WL 3672073, at *2
(8th

Cir.

July

11,

2016)

(published

opinion)

(refusing

to

“extend[] the FDCPA to time-barred proofs of claim” because the
Bankruptcy Code’s “protections against harassment and deception
satisfy the relevant concerns of the FDCPA”).

Here, where the

proofs of claim provide enough information to determine the debt
is

time

barred,

importance.

An

the

first

consideration

unsophisticated

debtor

is

of

reviewing

particular
a

proof

of

claim may be unaware of the statute-of-limitations defense and—
perhaps

not

accurately

appreciating

listed

the

legal

last-transaction

significance

and

charge-off

of

even

dates—may

nevertheless “acquiesce” to the claims.
While some courts have found the role of the bankruptcy
trustee

in

weeding

out

time-barred

claims

critical

in

distinguishing the bankruptcy context from civil lawsuits, see,
e.g., Nelson, 2016 WL 3672073, at *2, I am not persuaded.
best,

a

trustee’s

debt

collector

time.

At

who

worst,

files
the

such

debt

a

claim

collector

At

wastes

the

catches

the

trustee asleep at the switch and collects on an invalid claim to

2

As the debtors concede, their case might be different had
they scheduled these debts with the bankruptcy court, an action
that might be seen as an invitation to a creditor to file a
claim.

27

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the detriment of other creditors and, in many cases, the debtor.
In either case, the debt collector misleadingly represents to
the debtor that it is entitled to collect through bankruptcy
when it is not.
Moreover,

there

is

reason

to

doubt

the

efficacy

of

trustee as a vigilant steward of the debtor’s estate.

the
See,

e.g., In re Edwards, 539 B.R. 360, 365 (Bankr. N.D. Ill. 2015)
(“Chapter 13 trustees in this district do not object to proofs
of claim based on statute of limitations defenses.

This is not

surprising

affirmative

defenses
virtually

because
would

objecting

require

every

trustees

unsecured

impracticable.”).

to

proof

claims

based

to

examine

of

claim,

on
the

details

which

is

of

simply

Indeed, if trustees performed their duties

flawlessly, Atlas would have little incentive to engage in its
scheme.
Like filing a lawsuit on time-barred debt, Atlas’s alleged
debt-collection activity in this case is precisely the sort of
unfair and misleading practice that Congress intended the courts
to

recognize

as

a

violation.

After

the

debtors

entered

bankruptcy, Atlas bought their debts, or rather, as the bill of
sales said, “charged-off receivables.”

J.A. 58, 132, 143.

All

of these charged-off debts were more than five-years old, well
outside

Maryland’s

Nevertheless,

Atlas

three-year
filed

proofs
28

statute
of

claim

of
to

limitations.
recover

the

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unenforceable debts in the bankruptcy court.

The relevance of

the statute of limitations was not lost on Atlas, which included
the following notice on two of the three proof-of-claim forms it
filed: “This proof of claim is being filed pursuant to 11 USC
Secs. 101(5), 501(a) and 502(b) as said claim may be outside of
the statute of limitations.”

J.A. 55, 140.

Section 502(b)

explains that if a claim is objected to, the court will allow
the

claim

“except

to

the

extent

that . . .

such

claim

is

unenforceable against the debtor and the property of the debtor,
under any agreement or applicable law.”

§ 502(b)(1).

In short,

Atlas knew exactly what it was doing—exploiting a weakness in
the bankruptcy system and preying on potential error to collect
on debts where it should not.
purpose

of

bankruptcy

by

The practice subverts a core

diverting

estate

assets

from

the

creditors entitled to receive them.
Atlas rather stunningly argues that it is doing a public
service: “[B]ut for Atlas’ filing of its proofs of claim, those
debts would not be subject to discharge and at the conclusion of
Appellants’

chapter

13

cases,

Atlas

could

restart

collection

activity with respect thereto so long as it does not otherwise
violate the FDCPA.”

Appellee’s Br. at 40.

Really?

While the

statement is literally true, the (unintended) possibility that
the time-barred debts will be disallowed and discharged hardly
justifies Atlas’s tactics.

Moreover, that the debtors did not
29

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schedule the debts is some evidence that collection efforts have
stopped.

And it would not be surprising if they had; the time

for enforcement has passed, and the combination of the statute
of

limitations

and

the

FDCPA

seriously

collector can do to recover old debts.

limits

what

a

debt

Ideally, debtors would

remember all their old debts, realize they were time barred,
schedule them as disputed, and see that they were disallowed.
But the FDCPA asks what the least sophisticated consumer would
do, not the ideal one.

Atlas’s conduct games the bankruptcy

process; it does not ensure its integrity.
Accordingly, I would hold that Atlas’s conduct constitutes
a violation of the FDCPA.

Such a holding would not impose a

great burden on debt collectors.

“[A] debt collector is not

liable in an action brought under the [FDCPA] if [it] can show
‘the violation was not intentional and resulted from a bona fide
error notwithstanding the maintenance of procedures reasonably
adapted

to

avoid

any

such

error.’”

Jerman

v.

Carlisle,

McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 576 (2010)
(quoting 15 U.S.C. § 1692k(c)).
can

avoid

procedure

FDCPA
to

liability

screen

by

Atlas and other debt collectors
putting

unscheduled,

in

place

time-barred

a

reasonable

claims—if

Atlas

already has such a procedure, it can prove it in the district
court.

30

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II.
Because the majority determines that the FDCPA does not
reach Atlas’s conduct, it does not address the question whether—
if the FDCPA on its own terms would apply to the filing of timebarred claims—the Bankruptcy Code nevertheless precludes such an
action.

To

compatible,
principles.

determine
we

whether

employ

two

ordinary

federal

statutory

statutes

are

interpretation

See POM Wonderful LLC v. Coca-Cola Co., 134 S. Ct.

2228, 2236 (2014).

Because the circuits are split on this issue

and the arguments have been made extensively on both sides, I
explain

briefly

my

position

that

the

two

statutes

do

not

that

the

conflict in this instance.
The

Second

Bankruptcy
Roundup

and

Code

precludes

Funding,

(rejecting

an

Ninth

LLC,

FDCPA

622
claim

Circuits
certain
F.3d

have
FDCPA

93,

brought

concluded
suits.

95-96
during

(2d
the

Simmons
Cir.

v.

2010)

pendency

of

bankruptcy proceedings for the filing of an inflated proof of
claim); Walls v. Wells Fargo Bank, N.A., 276 F.3d 502, 510-11
(9th Cir. 2002) (barring an FDCPA claim for post-bankruptcy debt
collection in violation of the discharge order).

Both rely on

the comprehensive provisions and protections of the Bankruptcy
Code to hold that it leaves no room for FDCPA claims.
622 F.3d at 96; Walls, 276 F.3d at 510.

31

Simmons,

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The Third, Seventh, and Eleventh Circuits have rejected the
notion that FDCPA actions may not be brought in the context of
bankruptcy.
14116,

2016

Johnson v. Midland Funding LLC, Nos. 15-11240, 15WL

2996372,

at

*6

(11th

Cir.

May

24,

2016)

(published opinion) (holding that the Bankruptcy Code does not
impliedly repeal FDCPA actions for filing proofs of claim on
time-barred debt); Simon v. FIA Card Servs., N.A., 732 F.3d 259,
274 (3d Cir. 2013) (permitting an FDCPA claim for the violation
of

the

Bankruptcy

Code’s

subpoena

requirements);

Randolph

v.

IMBS, Inc., 368 F.3d 726, 730-31 (7th Cir. 2004) (comparing the
FDCPA and Bankruptcy Code and concluding they are compatible).
In

the

view

of

these

contradict

one

conflict”

because

simultaneously.”

courts,

another,
“any

the

nor

debt

statutes

are

they

collector

can

do

in

not

expressly

“irreconcilable

comply

with

both

Randolph, 368 F.3d at 730; accord Johnson,

2016 WL 2996372, at *5-6; Simon, 732 F.3d at 273-74; see also
Nat’l Ass’n of Home Builders v. Defs. of Wildlife, 551 U.S. 644,
662 (2007) (“While a later enacted statute . . . can sometimes
operate

to

amend

or

even

repeal

an

earlier

statutory

provision . . . , ‘repeals by implication are not favored’ and
will not be presumed unless the ‘intention of the legislature to
repeal [is] clear and manifest.’” (third alteration in original)
(quoting Watt v. Alaska, 451 U.S. 259, 267 (1981))).

32

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would

with

of

side

the

view

the

Third,

Seventh,

Eleventh Circuits, at least on the facts of this case.

and

Atlas

does not argue that the Bankruptcy Code expressly bars FDCPA
remedies.

Instead, it contends the statutes are irreconcilable:

“[W]hat [the debtors] allege is prohibited by the FDCPA (the
filing of a proof of claim with respect to a ‘stale’ debt) is
expressly permitted by the Bankruptcy Code.”
34.

But

this

argument

is

easily

Appellee’s Br. at

answered:

Because

the

Bankruptcy Code does not obligate a creditor to file a proof of
claim,

a

debt

collector

such

as

Atlas

can

comply

with

both

statutes by not filing unscheduled, time-barred proofs of claim.
See Johnson, 2016 WL 2996372, at *6; Randolph, 368 F.3d at 730. 3
This conclusion is buttressed by our holding, in a somewhat
different posture, that an FDCPA claim may be brought during
bankruptcy proceedings.

Covert v. LVNV Funding, LLC, 779 F.3d

242, 246-48 (4th Cir. 2015).
under

the

FDCPA

bankruptcies,

and

alleging

In Covert, debtors filed suit

MCDCA
that

after
a

the

creditor

completion
had

of

their

unlawfully

filed

proofs of claim without a debt-collection license.

Id. at 245.

We found the claims barred by res judicata because the debtors
failed to raise them during the bankruptcy.

3

Id. at 247-48.

For similar reasons, I would hold that the Bankruptcy Code
does not preempt the MCDCA.

33

Appeal: 15-1945

Doc: 38-1

Filed: 08/25/2016

Pg: 34 of 34

Because res judicata applies to unraised claims only if they
“could have been adjudicated in an earlier action,” id. at 246,
we

necessarily

determined

that

the

debtors

“could . . .

have

brought their affirmative claims for damages [under the FDCPA
and MCDCA] during the bankruptcy process under Federal Rule of
Bankruptcy Procedure 7001(1), which provides that ‘a proceeding
to recover money or property’ may be brought as an adversary
action,”

id.

at

248.

Similarly,

I

would

hold

that

the

Bankruptcy Code does not preclude or preempt the filing of the
FDCPA and MCDCA claims in this case.

III.
Because I believe the debtors state a claim under the FDCPA
(and MCDCA), I would reverse and remand for further proceedings.

34