Furnisher Does Not Violate FCRA by Reporting Discharged Debt

A district court in Nevada recently granted a mortgage company’s motion to dismiss FCRA claims where the reported debt had been discharged in bankruptcy.  The opinion serves as a reminder of the rules governing the reporting of discharged debt.  In Riekki v. Bayview Fin. Loan Servicing, the consumer alleged that the subject debt was discharged pursuant to his Chapter 13 bankruptcy and that the creditor continued to report balances through the pendency of the bankruptcy as well as post-petition.  Riekki v. Bayview Financial Loan Servicing, 2:15-cv-2427, 2016 U.S. Dist. LEXIS 99527 (D. Nev. Jul. 28, 2016).  The consumer disputed the credit reporting noting that the “balance on the account should be “$0” and the status should be reporting as current” as a result of his discharge.  [Complaint, ¶ 192].  On motions to dismiss, the defendant contended that the plaintiff’s FCRA claim failed as a matter of law because the reporting of delinquencies during the pendency of a bankruptcy proceeding or after discharge is not inaccurate under the FCRA. The defendant further pointed to the provisions of 15 U.S.C. §1681c which allows for the reporting of collection issues for seven years after a bankruptcy discharge and reporting the bankruptcy itself is allowed for ten years after the discharge. The court agreed holding that 15 U.S.C. §1681c “undermines any arguments that…debts discharged in bankruptcy [are] unreportable.”  Riekki at *5.