POST BANKRUPTCY DISCHARGE CREDIT REPORTING AND THE FCRAby Ayodeji Badaki, Esq. on 10/26/12
This is the second in a series of posts concerning post bankruptcy discharge credit reporting. With respect to what can be reported on credit reports post discharge, under the FCRA the reporting of incomplete or inaccurate information on a consumer's credit report is prohibited. Reporting a balance owed on a debt after a bankruptcy discharge is an FCRA violation and possibly also a violation of the discharge injunction under Federal Bankruptcy Laws. The FCRA and the ensuing regulations are quite clear that a credit report must accurately reflect the fact that a debt has been discharged in bankruptcy :
16 C.F.R. 600 app. section 607(b)(3)(F)(2) ("[A] consumer reporting agency may include delinquencies on debts discharged in bankruptcy in consumer reports, but must accurately note the status of the debt (e.g. discharged, voluntarily repaid).")
There is also ample case law in this regard. For example, in In re Torres, 367 BR 478 - Bankr. Court, SD New York 2007 the court noted: "However, a credit report that continues to show a discharged debt as "outstanding," "charged off," or "past due" is unquestionably inaccurate and misleading, because end users will construe it to mean that the lender still has the ability to enforce the debt personally against the debtor, that is, that the debtor has not received a discharge, that she has reaffirmed the debt notwithstanding the discharge, or that the debt has been declared non-dischargeable. See In re Helmes, 336 B.R. 105, 107 (Bankr.E.D.Va.2005):
A credit report entry that reflects a past due account is treated differently by prospective creditors in evaluating credit applications than an entry that reflects a debt that has been discharged in bankruptcy. The essential difference is that a discharged debt represents a historical fact, that the prospective borrower filed bankruptcy in the past and was relieved from the obligation. Nothing is now due. A past due debt represents a delinquent but legally enforceable obligation that must be resolved. See also Turner v. J.V.D.B. & Assocs., Inc., 330 F.3d 991, 995 (7th Cir.2003) (assertion that a person owed a debt that, because of the discharge, in effect no longer exists, is "on its face ... false."); White v. Trans Union, LLC, 462 F.Supp.2d 1079, 1082 (C.D.Cal.2006) (credit reports that do not reflect a bankruptcy discharge are inaccurate).