Bankruptcy Case of Jacqueline Chorba, Case No. 17-16032-MMH Adversary: Jacqueline Chorba v. MOMA Funding, LLC, Adversary Case No. 17-00380-MMH

A creditor holding a right to payment under applicable nonbankruptcy law generally may file a proof claim in a debtor’s bankruptcy case under section 501 of the U.S. Bankruptcy Code. In the chapter 13 case underlying this adversary proceeding, the Defendants filed proofs of claim based on defaulted debt purchased from another entity. The Plaintiff (Debtor) then filed a complaint against the Defendants that, as amended, objected to the Defendants’ proofs of claim and asserted two separate causes of action against the Defendants for alleged violations of the Maryland Consumer Debt Collection Act and the Maryland Consumer Protection Act. The Court had to consider the effect of plan confirmation and preemption on the Plaintiff’s complaint, as well as several of the principles articulated by the U.S. Supreme Court in Midland Funding, LLC v. Johnson, 137 S.Ct. 1407, 1412 (2017). The Court ultimately determined that (i) confirmation of the chapter 13 plan was not an adjudication of the claims on the merits; (ii) under Midland Funding, the Defendants’ proofs of claim, based on their right to payment on the purchased debt, could stand, subject to objections raised through the claims allowance process; and (iii) the Plaintiff’s claims that the Defendants’ act of filing the proofs of claim violated Maryland law were preempted by the Bankruptcy Code.