Midland Funding Michigan Attorney

U.S. Supreme Court rules in favor of debt collectors.

On May 15, 2017, the Supreme Court of the United States issued their decision in Midland Funding, LLC v. Johnson.


Respondent Johnson filed for Chapter 13 bankruptcy in 2014.  Petitioner Midland Funding filed a “proof of claim” asserting that Johnson owed Midland Funding $1,879.71 in credit card debt from May 2003.  Johnson objected the claim because it violated the relevant statute of limitations under Alabama law.  The bankruptcy court disallowed the claim.

Then, Johnson sued Midland Funding.  She claimed that by filing the obviously time-barred “proof of claim” in her bankruptcy case, Midland Funding claim was “false,” “deceptive,” “misleading,” “unconscionable,” and “unfair” within the meaning of the Fair Debt Collection Practices Act, 15 U. S. C. §§1692e, 1692f.


The District Court held that the Fair Debt Collection Practices Act did not apply and dismissed the case. On appeal, the Eleventh Circuit reversed the District Courts decision.  The U.S. Supreme Court granted certiorari.  After review, the Supreme Court reversed the Eleventh Circuit decision.  The Supreme court, in a 5-3 decision, held that (in a Chapter 13 proceeding) “the filing of a proof of claim that is obviously time barred is not a false, deceptive, misleading, unfair, or unconscionable debt collection practice within the meaning of the Fair Debt Collection Practices Act.”

Alabama law provides that a creditor has the right to payment of a debt even after the limitations period has expired.  The Supreme Court states that “a ‘claim’ is a ‘right to payment’” and the “passage of time extinguishes remedy but the right remains.”

What that means for you:

The Supreme Court decision in Midland Funding, LLC v. Johnson allows debt creditors to file their “proof of claims” in a Chapter 13 bankruptcy proceeding irrelevant of a States statute of limitations.  Even if a debt collector files a “proof of claim” in your Chapter 13 bankruptcy case, it doesn’t mean that their claim is enforceable.  Debt collectors have secured the right to file their claims, but this decision doesn’t secure their right to collect on those claims.

Midland Funding Michigan Attorney:

If you have outstanding debt, have been harassed by a debt collection agency, or contacted by a law firm or third party debt buyer like Midland Funding, LLC, Call Garmo & Kiste, PLC at (248) 398-7100 for a free consultation or contact us with a private message.

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