“The failure to update a credit report to
17 show that a debt has been discharged is also a
18 violation of the discharge injunction if shown to be
19 an attempt to collect the debt. Because debtors
20 often feel compelled to pay debts listed in credit
21 reports when entering into large transactions, such
22 as a home purchase, it should not be difficult to
23 show that the creditor, by leaving discharged debts
24 on a credit report, despite failed attempts to have
25 the creditor update the report, is attempting to
1 collect the debt.”
Furthermore, by failing on a systematic basis to
12 correct the credit reports, as alleged in the complaint,
13 Chase is enhancing its purchasers’ ability to collect on
14 the debt, which is, after all, charged-off debt when
15 purchased, with a relatively high, I can infer, prospect
16 of the borrower going into bankruptcy. Chase profits, I
17 can infer and as the complaint states, from that practice
18 by getting a higher purchase price from its buyers, even
19 if those buyers buy the debt before the bankruptcy has
20 occurred. The buyers know, that is, that post-sale Chase
21 will refuse to correct the credit report to reflect the
22 obligor’s bankruptcy discharge, which means that the
23 debtor will feel significant added pressure to obtain a
24 “clean” report by paying the debt. Separate and apart
25 from Chase seemingly having a duty to correct the report
under the FCRA, as discussed above, no one has pointed to
2 any provision of applicable law that prohibits Chase from
3 correcting the credit reports. And, in fact, Chase
4 eventually did so in respect of Mr. Haynes’ credit report.
5 Therefore, I believe the complaint sets forth a cause of
6 action that Chase is using the inaccuracy of its credit
7 reporting on a systematic basis to further its business of
8 selling debt and its buyer’s collection of such debt.
9 How the sale of the debt is reported supports
10 this conclusion. In other words, such disclosure, or,
11 more aptly, its limited nature, also puts Chase’s refusal
12 to correct the credit reports in context. Mr. Haynes’
13 credit reports have been referred to repeatedly in the
14 complaint, as well as at oral argument; obviously, they
15 are front and center in this litigation and may be
16 considered in connection with Chase’s 12(b)(6) motion. It
17 is acknowledged that although those credit reports list
18 the debt as “sold,” they do not identify the purchaser.
19 Therefore, as far as the debtor is concerned, the only
20 creditor to approach to correct the credit reports is
21 Chase, which, though it appears to be the only game in
22 town, as a matter of policy refuses to correct them (while,
23 in addition, retaining a percentage of payments sent to
24 Chase by the debtor, as opposed to Chase’s — undisclosed
25 — buyer), highlighting further the perniciousness of
Chase’s allegedly systematic approach in refusing to
2 correct such reports.
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