A proposed class-action lawsuit accusing collection agency LVNV Funding and law firm Eltman Eltman & Cooper of abusive collection practices can proceed, a federal judge has ruled. The judge found that the plaintiffs sufficiently alleged that defendants made false threats to seize consumers' property.

Filed in 2014 in Brooklyn federal court, the lawsuit seeks damages under the Fair Debt Collection Practices Act from LVNV Funding and Eltman Eltman & Cooper, which sues consumers on LVNV's behalf. LVNV's debt servicer Resurgent Capital Services also was named in the lawsuit. Details of the case weren’t immediately available.

Last year, in a separate case, the U.S. Court of Appeals for the Fourth Circuit affirmed a district court’s dismissal of claims against LVNV Funding for filing proofs of claim in a state where it wasn’t licensed as a debt collector.  

The plaintiffs in Covert v. LVNV Funding had filed a class action alleging that LVNV Funding filed proofs of claim in Chapter 13 cases without a Maryland debt collection license. The plaintiffs argued that by doing so, the defendant wasn't legally entitled to collect the debts. Five years before the district court action, each debtor had filed a Chapter 13 in which LVNV filed an unsecured proof of claim through its servicer.  Each bankruptcy proceeded through confirmation and each of the debt buyer’s claims was allowed and paid on a pro rata basis with other unsecured claims. In another case involving LVNV Funding last year, plaintiffs in Donaldson v. LVNV Funding had sued citing the use of false or deceptive representations to attempt to collect debts and threatening to take action that’s illegal. The lawsuit was dismissed in April 2015 when the Southern District of Indiana court ruled that Indiana law states a debt that’s become uncollectible because of the statute of limitations is still owed and that the FDCPA only regulates the remedies available to the collector.The Indiana court held, among other things, that filing a proof of claim doesn’t violate the provision of the FDCPA prohibiting threats to take action that can't legally be taken since there’s no threat in a proof of claim that accurately reflects information about an unsecured debt. The court held that the Bankruptcy Code states such debts are allowed, unless objected to by any party in interest. 


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