“I have a great deal of trouble with this business model,” Justice Sonia Sotomayor said yesterday near the outset of oral argument in the Supreme Court on Midland Funding LLC v. Johnson, the case to decide whether debt collectors violate the federal Fair Debt Collection Practices Act by purchasing stale claims for pennies and then filing proofs of claim when the underlying debt is barred by the statute of limitations. According to an analysis by ABI editor-at-large Bill Rochelle, the observation by Justice Sotomayor was the high point for debtors, because the justices seemed divided along the usual ideological lines. The Court will not likely be split 4/4, because Justice Stephen G. Breyer, who is often allied with the liberal wing on bankruptcy cases, repeatedly seemed concerned that ruling for debtors would transfer disputes into federal district courts that should be in bankruptcy courts. Read more.
Watch a video recap of Rochelle and ABI Resident Scholar Prof. Drew Dawson discussing yesterday’s Supreme Court oral argument in Midland Funding LLC v. Johnson.