U.S. Supreme Court divided over debt collection dispute

By By Lawrence Hurley Features Reuters

The U.S. Supreme Court on Tuesday appeared divided as it weighed whether people who have filed for bankruptcy can sue companies that attempted to collect old debt from them that was not required to be paid back because of state statutes of limitations.

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During arguments in the case, three liberal justices seemed sympathetic toward an Alabama debtor named Aleida Johnson, who entered bankruptcy in 2014. But Stephen Breyer, the fourth liberal on the eight-justice court, joined conservatives in raising questions about the broad implications of a ruling against the debt collection company, Midland Funding, a subsidiary of Encore Capital Group.

The court is evenly divided between conservatives and liberals.

Midland sought payment of $1,879 in debt that Johnson had incurred more than a decade earlier. Alabama law sets a six-year statute of limitations for debt to be collected.

Lawyers for debtors have said it is common practice for debt collection companies, which buy consumer debt at pennies on the dollar, to attempt to recoup debt that is not legally recoverable under state law unless the creditor actually agrees to pay it.

A ruling is due by the end of June.

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(Reporting by Lawrence Hurley; Editing by Will Dunham)