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Seventh Circuit Court of Appeals Rejects Consumer’s Demand to Remove Withdrawn Bankruptcy Petition From Her Credit Report

The United States Seventh Circuit Court of Appeals released a decision in June 2015 in the case of Childress v. Experian Information Solutions, affirming a district court’s decision to dismiss the plaintiff’s lawsuit against the credit reporting agency. The lawsuit was filed based on the reporting agency’s inclusion of the plaintiff’s withdrawn 2006 Chapter 13 bankruptcy petition in the plaintiff’s credit report, listing the petition as “dismissed” instead of “withdrawn,” which the plaintiff alleged has harmed her credit in violation of the Fair Credit Reporting Act (“FCRA”). The Seventh Circuit Court of Appeals ruled that Experian’s practices and policies had been in line with the FCRA and that compliance with the plaintiff’s request would be unreasonable and put an “enormous burden” on consumer credit reporting agencies.

money-matters-1173641The Plaintiff’s Issue and the Fair Credit Reporting Act

The plaintiff and her ex-husband filed a Chapter 13 bankruptcy petition in the Southern District of Indiana in 2006, and they then voluntarily withdrew the petition shortly thereafter. In 2009, the plaintiff noticed that her credit report listed her bankruptcy filing, noting the petition was dismissed. Experian listed the petition as dismissed based on a practice of gathering case information from an online public service that provides access to federal court and docket information.

The FCRA includes a provision requiring consumer credit agencies to note in a consumer’s credit report if a bankruptcy petition has been voluntarily withdrawn as opposed to dismissed by the court. This provision in the FCRA is only triggered when the reporting agency receives documentation certifying that the bankruptcy was voluntarily withdrawn, which had not been done by the plaintiff prior to filing the lawsuit.

The Plaintiff’s Case and Appellate Decision

The plaintiff’s lawsuit charged that the credit reporting agency should have reported from the outset that the bankruptcy petition was withdrawn, instead of only using the publicly available information from the online database, which stated the petition had been dismissed. The plaintiff argued that credit reporting agencies have the burden to research each bankruptcy case that is listed as “dismissed” on the database and determine whether the petition was dismissed by the court or withdrawn by the consumer.

The Court rejected this proposition, noting that a withdrawn case is also in fact dismissed, even if done so on the consumer’s own motion, while also finding that granting the plaintiff’s request would substantially overburden credit reporting agencies. The Court suggested that consumers in the plaintiff’s position contact credit reporting agencies themselves with the necessary documentation proving that their bankruptcy petition was withdrawn voluntarily.

Are You Considering Bankruptcy?

If you or a loved one is feeling overwhelmed with debt, it is important to consult with a qualified bankruptcy attorney to help you decide the best course of action to handle your debt. The ruling in Childress v. Experian Information Solutions demonstrates some of the credit implications of filing for Chapter 13 bankruptcy. Even a withdrawn bankruptcy petition that results in no further proceedings can affect a consumer’s credit. Before filing for bankruptcy, consumers should consult with an experienced bankruptcy attorney to ensure their credit recovery is as fast and easy as possible. The Louisville and Southern Indiana bankruptcy attorneys at the Schwartz Bankruptcy Law Center work hard to assist our clients with the complex process of bankruptcy, and we can help you get your debt behind you. Call 866-366-3328 today to schedule a risk-free consultation, or contact us through our website.

More Blog Posts:

Supreme Court Ruling Allows Bankruptcy Judges to Decide Issues Outside of a Bankruptcy with the Parties’ Consent, Kentucky Bankruptcy Lawyers Blog, published June 9, 2015.

Court of Appeals Rules Filing Deadline For Bankruptcy Claims Apply to Secured Creditors as Well as Unsecured Creditors, Kentucky Bankruptcy Lawyers Blog, published May 28, 2015.

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