Midland Funding, LLC v. Johnson

Midland Funding, LLC filed a proof of claim in Aleida Johnson's Chapter 13 bankruptcy case for a credit card debt that was past the statute of limitations. Johnson sued, alleging that filing a claim on a time-barred debt was false, deceptive, or misleading and violated the Fair Debt Collection Practices Act. The Supreme Court granted certiorari to resolve a circuit split. The Court held that the Bankruptcy Code permits creditors to file proofs of claim even on stale debts, and that such a filing does not, by itself, constitute a misleading or deceptive practice under the FDCPA. The decision emphasized the distinct procedural context of bankruptcy, where claims are subject to trustee objection and judicial scrutiny.

The U.S. Supreme Court ruled 5-3 that Midland Funding's filing of a time-barred proof of claim did not violate the FDCPA. Justice Breyer delivered the majority opinion, holding that the conduct was not false, deceptive, or misleading within the meaning of the Act.

Whether filing a proof of claim in a bankruptcy proceeding for a debt that is unenforceable because the statute of limitations has expired violates the Fair Debt Collection Practices Act.

The ruling significantly limited the application of the FDCPA in bankruptcy proceedings, allowing debt buyers to file claims on old, unenforceable debts without facing statutory liability. Consumer advocates criticized the decision for weakening protections against abusive collection of stale debt, while industry groups praised it for clarifying creditors' rights in bankruptcy.