Two debt collectors, Jefferson Capital Systems LLC and Resurgent Capital Services were recently fined $1,000 for filing claims that they knew were beyond the statute of limitations to collect. The claims were filed in the Chapter 13 case of In the Matter of Sekema, 2015 WL 340755 (Bankr. N.D. Ind. 1/7/15). The claims indicated that the charge off dates occurred almost 13 years ago for one claim and almost 15 years ago for the other. Both of these claims were therefore well beyond Indiana’s 6 year statute of limitations.
The court held that filing a proof of claim subjects the filer to the same standard as all other matters presented to the court. It requires, under Rule 9011(b)(2), that the claimant to conduct a reasonable inquiry to determine whether filing the claim is warranted. The court found that these debt collectors failed to conduct such an inquiry. The court commented that it does not take a rocket scientist to figure out that 1988 and 2001 charge off dates were well beyond the six years prior to the filing of this Chapter 13 case in 2014. “A third grader could do the math.” Finding that the claimants violated Rule 9011 when they filed the claims, the court imposed a sanction of $1,000 based on the statutory damages allowed under the Fair Debt Collection Practices Act.
In Maryland the statute of limitations to collect a debt is three years. Accordingly, if a debt collector would file a proof of claim where the underlying debt was charged off more than three years before the Chapter 13 case was filed, the debt collector would be in violation of Rule 9011 (assuming the bankruptcy courts here agree with the court in Indiana).
If you are considering filing for bankruptcy, you will need an experienced attorney to evaluate your case. The firm of Laura Margulies & Associates, LLC has successfully handled thousands of cases in Maryland and Washington, D.C., many involving unique or novel issues. Please contact us today for a consultation at (301) 816-1600. Our website address is: www.law-margulies.com.