District Court (Nev.) Says Bank’s Post-Discharge Reporting of Pre-Petition Debt Did Not Violate FCRA; The Reporting Was Still Accurate

In Abeyta v. Bank of America, N.A., 2016 WL 304308, at *2 (D.Nev., 2016), Judge Jones found that a bank’s reporting, post-discharge, of a consumer’s pre-petition debt as being in default, did not violate the FCRA because the report was not inaccurate.  The facts were as follows.

Plaintiff Ginney Abeyta filed for bankruptcy in this District in June 2010. (Compl. ¶ 15, ECF No. 1-1, at 6). Her debts were discharged in March 2014, including her debt to Defendant Bank of America, N.A. (“BOA”). (Id. ¶¶ 16–17). Nevertheless, in October 2014, BOA reported to Defendant Equifax Information Services, LLC (“Equifax”) that Plaintiff’s debt to BOA had been 120–149 days overdue as of July 2010 and that the “first major delinquency” had been reported in August 2010. (Id. ¶ 25). Plaintiff sent one or more letters to Equifax to have the reports removed, but BOA continued to report the delinquencies. (Id. ¶¶ 30–42).

The District Court found no inaccuracy and, hence, no FCRA claim.

BOA argues that Plaintiff has alleged no violation of the FCRA, because she does not allege that it is false that as of July 2010, Plaintiff was 120–149 days behind on her debt to BOA. The Court agrees. Plaintiff does not allege that the fact of the previous delinquency is untrue. She alleges only that the reported debt had been included on her June 2010 bankruptcy schedules and was eventually discharged. That, however, is not an allegation of inaccurately reported debt. Bankruptcy does not prevent the reporting of a previous debt. If the fact of the previous delinquency in this case is true, the FCRA explicitly declines to prohibit its reporting for at least seven years. See FTC v. Gill, 265 F.3d 944, 948 (9th Cir. 2001) (citing 15 U.S.C. § 1681c(a)). The Court is unaware of any statute or case providing that discharge in bankruptcy makes a debt unreportable (as opposed to uncollectable) so long as only the fact of the previous delinquency is reported. The fact that Congress explicitly permits bankruptcies themselves to be reported for ten years from the date of discharge, see 15 U.S.C. § 1681c(a)(1), undermines any argument that Congress intended specific debts discharged in bankruptcy to be categorically unreportable. The claim under the reinvestigation provision of the FCRA, 15 U.S.C. § 1681i, fails for the same reason. See Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 890 (9th Cir. 2010) (holding that such claims require an underlying false report). Plaintiff alleges in the First Amended Complaint (“FAC”), filed in response to the present motion, that the statement in Equifax’s October 2014 report that Plaintiff’s account with BOA was “past due” in July 2010 and became a “major delinquency” in August 2010 were false because the debt had been reported on the schedules of the June 2010 Chapter 13 action and was eventually discharged. (See First Am. Compl. ¶¶ 32–33, ECF No. 18). The FAC does not cure the deficiencies explained, supra.  The Court therefore dismisses the Complaint and the FAC with leave to amend to allege: (1) that the reported delinquency was inaccurate in-and-of-itself, i.e., that there was never any such delinquency; and/or (2) that the October 2014 report indicated not only that the debt previously existed, but also (falsely) that it was still due and owing not only in July 2010, i.e., before it was discharged, but also at the time of the report, i.e., after it was discharged.