Suing Creditors in Bankruptcy Court to Correct Your Credit Report

 
 

On May 3, 2007, Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York issued a potentially seminal decision denying Chase Bank USA, N.A. ("Chase")'s motion to dismiss complaints alleging that Chase had violated the discharge injunction under section 524(a)(2) of the Bankruptcy Code by refusing to update its disclosure to credit reporting agencies to note the effect of the plaintiffs' discharge on the enforceability of their unsecured debt to Chase. The plaintiffs allege that, notwithstanding their attempts to cause their credit reports to be updated, the reports continue to show their obligations to Chase as "past due" and/or "charged off," with no notation that the debts have been affected by bankruptcy. The plaintiffs allege that Chase's refusal to update the information that it previously provided to the credit reporting agencies regarding their outstanding debts will cause end users of the credit reports to conclude that the plaintiffs still owe an enforceable debt to Chase, thus adversely affecting the plaintiffs' credit scores and ability to obtain new credit.

This decision has the potential to give debtors new claims against creditors who fail to update the information they give to credit reporting agencies to indicate that debts have been discharged in bankruptcy. Please contact us to discuss your rights.