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SCOTUS: Debt collectors may submit time-barred claims in bankruptcy cases [pdf]
- jawns 9y agotl;dr In cases where the statute of limitations has made a debt unrecoverable in court, debt collectors may nonetheless file a claim for that debt as part of the debtor's bankruptcy proceedings, even though the statute of limitations is a valid defense against the claim. The 5-3 majority found that debt collectors don't do anything wrong by filing such claims and should not be legally prevented from doing so, because there's a difference between a claim and a valid claim, and it's up to the courts to sort out the validity. The dissent argued that the debt collectors' business model essentially exploits the bankruptcy system. Even though they know their claim will be shot down if noticed and appropriately answered, it often goes unnoticed or not appropriately answered.