If an unpaid debt is charged off, should it be removed from an individual’s credit report? While a plaintiff believed it should, a District Court judge in Oregon thought differently, and has dismissed a Fair Credit Reporting Act case against a pair of defendants.
A copy of the ruling in the case of Makela v. Experian Information Solutions, JPMorgan Chase Bank, and TD Bank can be accessed by clicking here.
The plaintiff filed for bankruptcy protection, which resulted in a pair of debts being charged off. The plaintiff obtained copies of her credit report and became upset when two of the defendants continued to report the debts as charged off month after month. The plaintiff filed suit, alleging the defendants violated the FCRA because a debt can only be charged off once and reporting multiple chargeoffs is inaccurate.
Reporting the debts as charged off on a monthly basis hurt the plaintiff’s credit score, which she argues is enough to distinguish her case from others making similar allegations that were ruled in favor of the defendants.
But there is no affirmative duty for furnishers to ensure that the companies generating credit scores, when using accurately reported information, produce accurate scores, ruled Judge Michael J. McShane of the District Court for the District of Oregon. “Plaintiff offers no authority to suggest that a decrease in credit score based on accurately reported charge offs gives rise to a claim against data furnishers under the FCRA,” Judge McShane wrote.
Regarding the claim that a debt can only be charged off once, Judge McShane noted that the FCRA allows credit reporting agencies to retain a charged off notation on an individual’s credit report for up to seven years. “A consumer’s debt does not simply disappear when a creditor charges off her debt,” Judge McShane wrote. “And while the charge off event occurs once, a bank’s reporting of an account as charged off on a recurring basis only shows that the outstanding debt has yet to be repaid. It does not indicate that the account has been charged off multiple times, as Plaintiff suggests.”