Supreme Court rules for creditors in debt claims case
Florida residents may be interested to hear about a recent Supreme Court ruling regarding old debt. In a 5-3 decision, the court ruled that creditors can use bankruptcy proceedings to collect balances that may otherwise be out of their reach because of the statute of limitations. The court said that companies were not violating the U.S. Fair Debt Collection Practices Act by pursuing bankruptcy claims on older debts.
The ruling was considered a victory for creditors such as Midland Bank. It had tried to collect a $1,900 credit card debt, but the claim was thrown out by a judge. The debtor in the case sued Midland, but it said that federal law gave it the right to file a bankruptcy claim even it couldn’t be collected as part of a lawsuit. Legal counsel for the debtor suggested that allowing the claim implied that the debt was valid and enforceable.
Justice Sotomayor wrote in a dissent that the claims being made by creditors or debt collectors were not being made in good faith. Instead, they were hoping that the courts would not realize that the time limit for collecting past balances had run out. She said the practice of buying debt and filing bankruptcy claims was shocking and unconscionable.
Those who are seeking debt relief may obtain it by filing for bankruptcy. It may be possible to have debts discharged within a matter of weeks, and it may also be possible to retain ownership of certain types of property. An lawyer may be able to explain the benefits of filing as well as the process for doing so. One benefit may be an automatic stay put in place against creditor collection actions such as wage garnishment, repossession or foreclosure. An lawyer could also mount a challenge by notifying the trustee that a creditor’s claim is stale due to the expiration of the applicable statute of limitations.