Last year, the United States Supreme Court held that the FDCPA’s unique restrictions on debt collectors do not necessarily translate well in the world of bankruptcy. In Midland Funding. LLC v. Johnson, 137 S. Ct. 1407 (2017)—a case our firm was involved in, and which you can read about here—the Supreme Court held that, regardless of lower courts’ holdings that the FDCPA prohibits debt collectors from filing lawsuits in state court for time-barred debts, those same debt collectors have a right to file proofs of claim in bankruptcy courts for the same debts.
Earlier this month, applying the principles of Midland Funding, a Maryland bankruptcy court held that a debt collector who would be prohibited from filing a collection lawsuit under state law is nonetheless allowed to file a proof of claim in bankruptcy court. See In re Chorba, Case No. 17-380 (Bankr. D. Md. Mar. 8, 2018). Under Maryland’s consumer protection statute, a debt collector that is not licensed cannot sue for a debt, and any judgment an unlicensed debt collector might obtain can be...
