What Happens When Laws Collide?

As lawyers, words are our stock in trade.

If we want to describe, explain, or persuade, we need to use the right word.

The difference between the almost right word and the right word is really a large matter – ’tis the difference between the lightning-bug and the lightning.  MARK TWAIN

I was blown away by the casual simplicity and clarity of Ed Boltz’s explanation of the difference between preemption and preclusion in an exchange  that just flew by on the NACBA list serve.  (You are a member of NACBA, aren’t you?)

Ed Boltz, NC Bankruptcy Lawyer

Ed has kindly permitted me to share here his charge to use the right word.

The discussion was originally about the 11th Circuit’s decision in Crawford v. LVNV, permitting FDCPA remedies for asserting of a stale claim in Crawford’s bankruptcy case. 

Take it away, Ed.

Choose your words carefully

It is vital to use terminology precisely, especially as different words cause different results to occur:

Preemption is when federal law supersedes or displaces state  law.

This can be partial or field preemption, express or implied, each with different criteria.

It occurs because the Supremacy Clause gives greater dignity (again a term with specific meaning) to federal laws than state or local.

Federal laws cannot preempt other federal laws, because they are of equal dignity.

Preclusion, however, is a means of resolving when federal laws conflict.

This can be express, for example, if one statute said that other statutes don’t apply. The Bankruptcy Code is replete with examples, i.e. amounts that would normally be collectible under the Tax Code are stayed and even dischargeable.

Preclusion can also be implied, for example where one statute does so much on a topic in certain circumstances  that other can’t function.  But here, a court must try to allow both statutes to function and to harmonize their goals and processes.

Preclusion at work

This is what most bankruptcy judges mean when they hold that the FDCPA is inapplicable to the bankruptcy claims process.  But when you read these holdings,  the courts aren’t usually deciding that the complained-of violation,  whether collecting on a stale debt,  not sending proper disclaimers, contacting represented consumers, is permitted.  The debts where the Statute of Limitations has run are disallowed.  Calls have to go through counsel.

What the judges do not want, however, is to be forced to give $1000 in statutory damages and attorneys fee, especially without any discretion.  That is the rub and it chafes, just as the lack of discretion in BAPCPA.  Judges want to judge, not be told by Congress how to run a calculator.

The problem for judges is, however, that Congress does get to tell them what to do.  So when the FDCPA determines (not arbitrarily, but for the very sound reason that absent the sting from statutory damages, creditors will not comply) that an attempt to collect a stale debt is worth $1000 plus actual damages, the bankruptcy judge has to ask whether that discretionless  award would utterly frustrate the purposes and processes of bankruptcy.

The question is not whether the Bankruptcy Code and Rules are sufficient to handle claims,  but whether the FDCPA is incompatible.

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