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Media Alerts - Chaille Dubois, et al. v. Atlas Acquisitions LLC -- Fourth Circuit
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October 24, 2016
  Chaille Dubois, et al. v. Atlas Acquisitions LLC -- Fourth Circuit
Buyer Beware When Scheduling Debts in Chapter 13 Bankruptcies

Areas of Law: Bankruptcy Law

Issue Presented: Whether a debt collection agency violates the Fair Debt Collective Practices Act (FDCPA) by filing proofs of claim based on time-barred debts in a Chapter 13 bankruptcy.

Brief Summary: The United States Court of Appeals for the Fourth Circuit held that Atlas Acquisitions, LLC, a debt collection agency, did not violate the FDCPA and affirmed the bankruptcy court's dismissal of Appellant's FDCPA claims because although the debt was time-barred, the statute of limitations did not extinguish the debt and the debtor failed to schedule a time-barred debt.

Extended Summary: The Fair Debt Collections Practices Act (FDCPA) was enacted by Congress to eliminate abusive debt collection practices. The statute prohibits debt collectors from using "any false, deceptive, or misleading representation or means in connection with the collection of any debt," or from using "unfair or unconscionable" methods to collect a debt. When debt collectors are found to be in violation of the FDCPA they are liable for actual damages, statutory damages up to $1,000, and attorney's fees and costs.

This case concerns two debtors, Chaille Dubois and Kimberly Adkins, who secured loans from payday lenders that were eventually sold to a third party debt collector, Atlas Acquisitions, LLC. Adkins owed two debts to Atlas, one for $184.62 and another for $390.00. Dubois owed $135.00 to Atlas based upon a loan that originated with payday lender Iadvance.

In the bankruptcy court, Atlas brought a proof of claim against both Dubois and Adkins for the unpaid debts. A proof of claim is the mechanism by which a creditor can register its interest against the assets of the bankruptcy estate. In bankruptcy court, Adkins and Dubois filed complaints against Atlas alleging that Atlas' claims were essentially stale and violated the FDCPA. The bankruptcy court quickly determined that filing a proof of claim was not a form of debt collection activity under the FDCPA and dismissed all of Dubois' and Adkins' claims.

The United States Court of Appeals for the Fourth Circuit first found that filing a proof of claim was a debt collection activity that could be regulated by the FDCPA because filing a proof of claim is an attempt to collect a debt. Next, the Fourth Circuit held that when the statute of limitations does not extinguish a debt, a time-barred debt falls within the Bankruptcy Code's broad definition of a claim because a time-barred debt still constitutes a "right to payment." The Fourth Circuit held that filing a proof of claim in a Chapter 13 bankruptcy based on a time-barred debt does not violate the FDCPA when the statute of limitations has not extinguished the debt. The Fourth Circuit affirmed the Bankruptcy Court for the District of Maryland's dismissal of Dubois and Adkins' FDCPA claims.

To read the full opinion, click here.

Panel: Judges Diaz, Floyd, and Thacker

Argument Date: May 10, 2016

Date of Issue:
August 25, 2016

Docket Number: No. 15-1945

Decided: August 25, 2016

Case Alert Author: Dena Robinson, Univ. of Maryland Carey School of Law

Counsel: Morgan William Fisher, LAW OFFICES OF MORGAN FISHER LLC,
Annapolis, Maryland, for Appellants. Donald S. Maurice, Jr.,
MAURICE WUTSCHER, LLP, Flemington, New Jersey, for Appellee.
Washington, D.C., for Appellants. Alan C. Hochheiser, BUCKLEY
KING, LPA, Cleveland, Ohio, for Appellee.

Author of Opinion:
Judge Floyd

Case Alert Supervisor:
Professor Renee Hutchins

    Posted By: Renee Hutchins @ 10/24/2016 10:40 AM     4th Circuit  

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