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Judge Denies Motion to Dismiss FDCPA Suit Over Inquiry to Credit Bureau

A District Court judge in Ohio has denied a defendant’s motion to dismiss after it was sued for allegedly violating the Fair Debt Collection Practices Act by inquiring about the status of a debt that had been discharged in bankruptcy with a credit bureau.

A copy of the ruling in Holloway v. JTM Capital Management can be accessed by clicking here.

The plaintiff filed for Chapter 7 bankruptcy protection and had all of her unsecured debts discharged. Six months after the debts were discharged, the plaintiff looked at her credit report and noticed the defendant had requested a review of the plaintiff’s account from the credit bureau. The credit report indicated the reason for the review request from the defendant was for “collection.”

Alleging she did not owe the defendant at the time she filed for bankruptcy, the plaintiff filed suit, accusing the defendant of violating the FDCPA. The defendant argued that it did not meet the definition of debt collector as defined by the FDCPA and the inquiry to the credit bureau is not actionable because it was not an attempt to collect on a debt.

The defendant argued it is a passive debt buyer and not a debt collector, but the judge ruled that because the plaintiff is alleging that the defendant’s principal purpose is the collection of debts owed to third parties, he must accept the allegations as true at this stage of the proceedings.

“At this stage of the proceedings the Court must accept Holloway’s allegations as true,” wrote Judge Christopher Boyko of District Court for the Northern District of Ohio. Eastern Division. “Whereas subsequent evidence may prove otherwise, on a motion to dismiss, Holloway’s allegations plausibly support her claim that JTM is a debt collector under the FDCPA.”

Regarding the inquiry with the credit bureau, even though the defendant sought information from the bureau instead of supplying information about the debt, “it did convey one piece of information -i.e. that it sought information for purposes of collection,” wrote Judge Boyko. “It also raises the question whether JTM could have gained access to Holloway’s credit report if it did not allege it was for collection since the Complaint alleges the debt was discharged.”

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