In the

United States Court of Appeals

For the Seventh Circuit

No. 99-1736

JAMES W. ADAIR,

Plaintiff-Appellant,

v. 

MICHAEL L. SHERMAN and

SHERMAN & SHERMAN,

Defendants-Appellees.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 98 C 3946--George M. Marovich, Judge.

Argued February 9, 2000--Decided August 25, 2000

 Before BAUER, EASTERBROOK and RIPPLE, Circuit Judges.

 RIPPLE, Circuit Judge. James Adair brought this

action under the Fair Debt Collection Practices

Act ("FDCPA"), 15 U.S.C. sec. 1692 et seq. He

contends that Michael Sherman and his law firm,

Sherman & Sherman (collectively "Sherman &

Sherman"), overvalued their secured claims in Mr.

Adair’s Chapter 13 bankruptcy proceedings. The

district court held that Mr. Adair’s action was

barred because he had failed to object to the

valuation of the claim in the bankruptcy court.

For the reasons set forth in the following

opinion, we affirm the judgment of the district

court.

I

BACKGROUND

 Because the district court dismissed Mr. Adair’s

complaint for failing to state a claim, we

consider all facts in the light most favorable to

him. See Hernandez v. Joliet Police Dept., 197

F.3d 256, 262 (7th Cir. 1999). In March 1997, Mr.

Adair obtained a loan from First Midwest Bank

("FMB"), with an amount financed of $16,483.22.

The loan was secured by a 1995 Chevrolet Lumina

automobile. In July, Mr. Adair filed for

bankruptcy under Chapter 13. His bankruptcy plan

provided that all allowed secured claims would be

paid in full, with unsecured creditors to receive
a percentage of their allowed claims.

 On September 3, Sherman & Sherman filed a proof

of claim on behalf of FMB. The proof of claim

listed the value of the Chevrolet as $19,841.43,

an amount greater than the car’s original

purchase price. Mr. Adair did not object to the

valuation of the car prior to confirmation. The

Chapter 13 trustee confirmed Mr. Adair’s

bankruptcy plan on September 15, and allowed

FMB’s claim as fully secured. In June 1998, Mr.

Adair filed an adversary proceeding in the

bankruptcy court challenging FMB’s proof of

claim; that proceeding was dismissed when Mr.

Adair’s Chapter 13 proceeding was dismissed

altogether./1

 Mr. Adair subsequently filed this FDCPA

complaint in district court, seeking damages for

what he alleged was Sherman & Sherman’s practice

of overvaluing collateral in proofs of claims

filed with the bankruptcy court. He contends that

Sherman & Sherman overvalued collateral

fraudulently, in order to establish as secured

claims that should have been unsecured. The

district court granted Sherman & Sherman’s motion

to dismiss and held that the action was barred by

claim preclusion, also known as res judicata.

II

DISCUSSION

 Although the district court articulated its

decision in terms of claim preclusion, we believe

that this case is more appropriately analyzed

under the closely related, although analytically

distinct, doctrine of collateral estoppel or

issue preclusion./2 Under the doctrine of issue

preclusion, an issue may not be litigated if the

following conditions are met: (1) the issue

sought to be precluded is the same as that

involved in a prior action; (2) the issue was

actually relitigated; (3) the determination of

the issue was essential to the final judgment;

and (4) the party against whom estoppel is

invoked was represented in the prior action. See

Chicago Truck Drivers, Helpers & Warehouse Union

(Indep.) Pension Fund v. Century Motor Freight,

Inc., 125 F.3d 526, 530 (7th Cir. 1997); La

Preferida, Inc. v. Cerveceria Mondelo, 914 F.2d

900, 905-06 (7th Cir. 1990). As the Supreme Court

of the United States has stated: "Under

collateral estoppel, once an issue is actually

and necessarily determined by a court of

competent jurisdiction, that determination is

conclusive in subsequent suits based on a

different cause of action involving a party to

the prior litigation." Montana, 440 U.S. at 153.

"Whether the issues are identical is a question

of law." E.B. Harper & Co. v. Nortek, Inc., 104
F.3d 913, 922 (7th Cir. 1997). We decide such

questions de novo. See Caruso v. De Luca, 81 F.3d

666, 670 (7th Cir. 1996).

 Issue preclusion is an affirmative defense. See

Blonder-Tongue Lab., Inc. v. University of Ill.

Found., 402 U.S. 313, 350 (1971). Therefore, the

defendant has the burden to set forth facts

sufficient to satisfy each element of the

defense. See Havoco of Am., Ltd. v. Freeman,

Atkins & Coleman, Ltd., 58 F.3d 303, 306 (7th

Cir. 1995); La Preferida, 914 F.2d at 906. We now

consider whether Sherman & Sherman has satisfied

each of these requirements. As we pointed out in

Havoco, in determining whether these criteria

have been met, it is often necessary for the

court to consult substantive principles of law in

order to determine the scope of the earlier

judicial determination or the parties bound by

that determination. See 58 F.3d at 308. In the

case before us, it will be necessary to refer to

the substantive law of bankruptcy and, indeed, to

some extent, to the FDCPA, to determine whether

the principles of issue preclusion ought to

apply.

A.

 We begin by examining the action of the

bankruptcy court in order to determine the nature

and the scope of its determination. We must

ascertain whether the bankruptcy court actually

and necessarily decided an issue that would now

preclude recovery in the FDCPA action. Sherman &

Sherman filed a proof of claim listing the value

of the 1995 Chevrolet as $19,841.43. According to

the bankruptcy code, any proof of claim filed by

a creditor is deemed allowed, unless a party in

interest objects. See 11 U.S.C. sec. 502(a); In

re Greenig, 152 F.3d 631, 633 (7th Cir. 1998)./3

"A proof of claim executed and filed in

accordance with the Bankruptcy Rules constitutes

prima facie evidence of the validity and amount

of the claim." In re Ross, 162 B.R. 785, 788

(Bankr. N.D. Ill. 1993) (citing Fed. R. Bankr. P.

3001(f)).

 Mr. Adair had notice of the proof of claim prior

to confirmation, but he chose not to object to

it. "As a general rule, the failure to raise an

objection at the confirmation hearing or to

appeal from the order of confirmation should

preclude attack on the plan or any provision

therein as illegal in a subsequent proceeding."

In re Chappell, 984 F.2d 775, 782 (7th Cir. 1993)

(quotation marks and ellipses omitted); see also

In re Pence, 905 F.2d 1107, 1110 (7th Cir. 1990).

In our decision in Pence, we refused relief to a

creditor who, "instead of attacking the valuation

head-on at the confirmation hearing," chose "a
collateral attack on the confirmation order where

valuation may not be contested." Id. at 1110. Our

sister circuits share our view that once a

bankruptcy plan is confirmed, its terms are not

subject to collateral attack. See Andersen v.

UNIPAC-NEBHELP, 179 F.3d 1253, 1258-59 (10th Cir.

1999); In re Varat Enters., Inc., 81 F.3d 1310,

1315-17 (4th Cir. 1996); In re Justice Oaks II,

Ltd., 898 F.2d 1544, 1553 (11th Cir.), cert.

denied, 498 U.S. 959 (1990); In re Szostek, 886

F.2d 1405, 1413 (3d Cir. 1989); In re Gregory,

705 F.2d 1118, 1121 (9th Cir. 1983). 

 These authorities lead us to the conclusion

that, when a proof of claim is filed prior to

confirmation,/4 and the debtor does not object

prior to confirmation,/5 the debtor may not file

a post-confirmation collateral action that calls

into question the proof of claim. See Justice

Oaks, 898 F.2d at 1553; Ross, 162 B.R. at 789

("The law is well settled that a confirmation

order is res judicata as to all issues decided or

which could have been decided at the hearing on

confirmation.")./6 Allowing collateral attacks

of the type brought by Mr. Adair would give

debtors an incentive to refrain from objecting in

the bankruptcy proceeding and would thereby

destroy the finality that bankruptcy confirmation

is intended to provide./7

 In short, the bankruptcy process provides

protection against fraudulent proofs of claims.

Mr. Adair had the opportunity to contest Sherman

& Sherman’s proof of claim and practices related

thereto in the bankruptcy court. Because he chose

not to, he is barred from doing so here./8

B.

 We are also convinced that issue preclusion

applies because the FDCPA is an improper vehicle

for challenging the amount of a debt established

by the bankruptcy court. The FDCPA regulates the

practices used to collect a debt./9 See Keele v.

Wexler, 149 F.3d 589, 594 (7th Cir. 1998) ("[T]he

FDCPA is designed to protect consumers from the

unscrupulous antics of debt collectors,

irrespective of whether a valid debt actually

exists."); see also Hawthorne v. Mac Adjustment,

Inc., 140 F.3d 1367, 1370-71 (11th Cir. 1998);

Mabe v. G.C. Servs. Ltd. Partnership, 32 F.3d 86,

87-88 (4th Cir. 1994); Zimmerman v. HBO Affiliate

Group, 834 F.2d 1163, 1167 (3d Cir. 1987). As Mr.

Adair has framed his FDCPA action, it cannot

succeed without a showing that the existence or

amount of his debt was established improperly.

However, this circuit and other federal courts

have held that an FDCPA action is not an action

to establish a debt but an action contesting the

method of collection of that debt. See Whitaker

v. Ameritech Corp., 129 F.3d 952, 957-58 (7th
Cir. 1998); Alger v. Ganick, O’Brien & Sarin, 35

F. Supp.2d 148, 159 n.20 (D. Mass. 1999) (citing

Whitaker); Blakemore v. Pekay, 895 F. Supp. 972,

983-84 (N.D. Ill. 1995); Azar v. Hegay, 874 F.

Supp. 1314, 1317 (N.D. Fla.), aff’d, 66 F.3d 342

(11th Cir. 1995).

 Mr. Adair is attempting to use an FDCPA claim to

attack the existence of the underlying debt, a

matter already determined definitively in the

bankruptcy proceeding. "The purpose of the proof

of claim is to alert the court, trustee, and

other creditors, as well as the debtor, to claims

against the estate." In re Fernstrom Storage &

Van Co., 938 F.2d 731, 734 (7th Cir. 1991)

(quotation marks omitted). By allowing FMB’s

proof of claim, the bankruptcy court confirmed

the existence of a debt for Mr. Adair. To succeed

on the FDCPA claim that he has brought, Mr. Adair

would have to show that the value of the

Chevrolet is incorrect in the proof of claim; if

$19,841.43 is the proper value of the car, then

Sherman & Sherman’s claim is not fraudulent.

However, Mr. Adair is foreclosed from

collaterally attacking the valuation of the car.

The amount of the debt is a matter already

settled in another forum, the bankruptcy court.

 In sum, as Mr. Adair has framed his FDCPA claim,

he contests the amount of the underlying debt,

not the method employed by the defendants in its

collection. The amount of the debt was determined

definitively, however, in the earlier bankruptcy

proceeding when a proof of claim was submitted

prior to confirmation and Mr. Adair’s bankruptcy

claim was later confirmed. The amount of the debt

therefore cannot be relitigated in a subsequent

FDCPA action by operation of the doctrine of

issue preclusion./10 

Conclusion

 For the foregoing reasons, the judgment of the

district court is affirmed.

AFFIRMED

/1 Mr. Adair is now once again in bankruptcy

proceedings. His return to bankruptcy does not

foreclose this action because debtors in Chapter

13 proceedings may bring actions in their own

name to vindicate statutory rights. See Cable v.

Ivy Tech State College, 200 F.3d 467, 472-73 (7th

Cir. 1999).

/2 See Montana v. United States, 440 U.S. 147, 153

(1979) (setting forth the differences between the

two related doctrines).
/3 Parties in interest include not only the debtor,

but anyone who has a legally protected interest

that could be affected by a bankruptcy

proceeding. See In re FBN Food Servs., Inc., 82

F.3d 1387, 1391 (7th Cir. 1996). Therefore, if

one creditor files a potentially fraudulent proof

of claim, other creditors have standing to object

to the proof of claim.

/4 We need not address the practice in bankruptcy

courts of allowing proofs of claims to be filed

after confirmation. See, e.g., In re Witkowski,

16 F.3d 739, 741 (7th Cir. 1994); In re Strong,

203 B.R. 105, 114 (Bankr. N.D. Ill. 1996). We

address only the situation in which the creditor

filed a proof of claim before confirmation and

the debtor had enough time to formulate an

objection prior to confirmation. 

/5 Mr. Adair has not argued that the time between

the filing of Sherman & Sherman’s proof of claim

and the confirmation hearing was insufficient to

allow him to prepare an objection.

/6 There has been some tension in bankruptcy court

cases as to whether debtors are required to

object to proofs of claims prior to confirmation.

See In re Simmons, 224 B.R. 879, 883-84 (Bankr.

N.D. Ill. 1998) (noting cases). We respectfully

choose not to follow those cases allowing postconfirmation objections to proofs of claims to be

filed even though the proof of claim itself was

filed sufficiently in advance of the confirmation

hearing. See In re Church, No. 96 B 18347, 1998

WL 97691, at *3-*4 (Bankr. N.D. Ill. Mar. 2,

1998).

/7 We note the thoughtful analysis of a different

district court in an action similar to the one

before us:

Plaintiff’s claims . . . raise the serious

concern that bankruptcy debtors will deliberately

fail to challenge proofs of claim, despite having

knowledge of possible challenges to the proofs of

claim and despite being represented in their

bankruptcy, in the hope of maintaining collateral

challenges pursuant to statutes, like the FDCPA,

which may provide additional damages, as well as

attorney’s fees. If debtors were permitted to

make such strategic decisions and, thus, to delay

their challenges to the legality or correctness

of proofs of claim until after dismissal of the

bankruptcy case, the concept of finality in

bankruptcy will be completely undermined.

Baldwin v. McCalla, Raymer, Padrick, Cobb,

Nichols & Clark, L.L.C., No. 98 C 4280, 1999 WL

284788, at *7 (N.D. Ill. Apr. 26, 1999)

(citations omitted).
/8 We point out that failure to object prior to

confirmation does not foreclose a debtor from

challenging fraudulent proofs of claim in the

bankruptcy court. A bankruptcy confirmation may

be revoked by the bankruptcy court if it was

procured by fraud. See 11 U.S.C. sec. 1330(a).

Further, parties who commit fraud on the

bankruptcy court may be sanctioned by that court

pursuant to Federal Rule of Bankruptcy Procedure

9011, which is analogous to Rule 11 of the

Federal Rules of Civil Procedure. See In re

Bryson, 131 F.3d 601, 603 (7th Cir. 1997). Rule

9011(b) explicitly requires all filings with the

court to present only facts which the party

reasonably believes to have evidentiary support;

debtors facing fraudulent proofs of claim could

seek sanctions under that section. A motion for

sanctions under Rule 9011 must be made separately

from the objection to a proof of claim,

potentially giving debtors additional time to

discover any fraud on the part of the creditor.

See Fed. R. Bankr. P. 9011(c)(1)(A); In re Knox,

237 B.R. 687, 698-99 (Bankr. N.D. Ill. 1999).

Bankruptcy courts also have the authority to

sanction attorneys under 28 U.S.C. sec. 1927,

which allows the court to hold attorneys liable

for any excess expenses caused because of their

unreasonable or vexatious conduct. See In re

Volpert, 110 F.3d 494, 500-01 (7th Cir. 1997).

/9 The FDCPA provides a definition of "debt":

The term "debt" means any obligation or alleged

obligation of a consumer to pay money arising out

of a transaction in which the money, property,

insurance, or services which are the subject of

the transaction are primarily for personal,

family, or household purposes, whether or not

such obligation has been reduced to judgment.

15 U.S.C. sec. 1692a(5).

/10 Because the parties have not presented the issue,

we express no opinion as to whether a FDCPA claim

can ever be predicated on a previous filing in a

bankruptcy proceeding. Cf. Kokoszka v. Belford,

417 U.S. 642, 650-52 (1974) (holding that the

wage garnishment protections of the Consumer

Credit Protection Act sought to prevent persons

from entering bankruptcy in the first place and

therefore were not applicable when bankruptcy did

occur).