Celebrating 10 years! 2007-2017

The most useless supreme court decision

http://www.scotusblog.com/case-file s/cases/midland-funding-l dingbat05/16/17
It was a mix of bad faith actors that created the problem. M vohod05/16/17
I don't really get your point OP. You linked to the docket o specv31305/16/17
This is a troubling decision. There is so much potential for newsolo05/16/17
The majority opinion hews more closely to the statutory lang specv31305/16/17
dingbat (May 16, 2017 - 7:59 am)

http://www.scotusblog.com/case-files/cases/midland-funding-llc-v-johnson/?wpmp_switcher=desktop

The issue is whether it's unfair to bring up time-barred debt at a bankruptcy proceeding.
i.e. can a creditor bring up a debt that's past the statute of limitations at a court proceeding to wipe out old debt.

How on earth this ever made it to the supreme court is beyond me. Sure, there's some legal technical issues, but, talk about moot.
"hi, I have a debt that I can't collect". "that's ok, we're busy wiping out his old debt anyway"

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vohod (May 16, 2017 - 8:55 am)

It was a mix of bad faith actors that created the problem. Most BK mills file form Ch 13s and that is it, the petitioner is largely on their own. Evidently these debt buyers were PoCing out of stat debt in these instances to try to make a buck. If Petitioner gets the "wrong" T'ee they may end up paying under their Ch13 plan on out of stat debt--restarting the SOL in some jurisdictions.

I am of the opinion that (1) PoCing an out of stat debt is stupid, but (2) at the BK stage there should be controls in place.

There was a trustee in Idaho who would sue under the FDCPA when this happened on the theory it was unfair/deceptive via his power over all such claims the petitioner might have.

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specv313 (May 16, 2017 - 10:14 am)

I don't really get your point OP. You linked to the docket of the case on SCOTUSBlog, which also posted commentary on the case yesterday: http://www.scotusblog.com/2017/05/opinion-analysis-justices-approve-filing-stale-claims-consumer-bankruptcies/#more-255763

If you read Sotomayor's dissent you'll see why filing stale claims in BK court can oftentimes pay out quite handily for debt buyers, and why this case is essentially a loss from a consumer protection stand point.

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newsolo (May 16, 2017 - 10:41 am)

This is a troubling decision. There is so much potential for abuse with the claims process and so few Trustees and/or Debtors attorney have the time or inclination to actually investigate the claims that this will lead to some very poor results. What if a time-barred creditor receives a distribution and the case is subsequently dismissed? The debt has essentially been renewed and the creditor may be able to proceed collections with the affirmative defense nullified by the distribution. It's also prejudicial to creditors that have valid claims.

Anecdotally, I had a client with a claim filed on a 26 year old debt. Not only was the claim way past the SoL, the Debtor had filed and received discharges in three previous bankruptcies since the debt was incurred. We did not schedule the creditor and have no idea how they even found out about the case. Had we not objected to the claim, they would have received funds through the case.

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specv313 (May 16, 2017 - 10:59 am)

The majority opinion hews more closely to the statutory language of the BK Code; the dissent essentially makes a policy-based argument why these types of stale claims should be subject to the FDCPA. Crappy result - the ball's in Congress's court to change the law now (good luck there).

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