White v. Experian et al: CRAs must update SOME discharged accounts after bankruptcy filing

The 8/19/08 stipulated order pertains to several class action against all three CRAs.

DRAFT: I will edit this entry after I read the order again or get some feedback from attorneys.  I am NOT an attorney (updated 10/14/08 11:03 am)

The lead case is Terri N. White, et al. v. Experian Information Solutions, Inc.  Case No. SA CV 05-1070.

The 8/19/08 order.

The credit bureaus routinely failed to correctly report discharged accounts as included in bankruptcy and the order addresses some, but unfortunately not all problems with after bankruptcy reporting.

It shows that the plaintiffs’ attorneys don’t know anything about FICO scores and they missed the opportunity to make this a truly comprehensive order.  Of course that’s good for you, the credit professional, as it means that most after bankruptcy reports will benefit from an expert’s review.

The highlights of the order:

1) CRAs have to report many, but not all derogatory tradelines, collections and judgments as included in bankruptcy within 60 days of reporting the bankruptcy filing.

The CRAs had until October 1, 2008 to scrub all credit files to ensure that most dischargeable closed derogatory accounts with major derogatories (as defined) and opened before the bankruptcy discharge are reported as included in bankruptcy, with NO balances and NO new lates payments.

2) CRAs cannot update certain dates such as the EXTREMELY important Experian status date.

This was one of my claims against Experian in my first federal suit.  Unfortunately, I had to dismiss my entire case in exchange for the removal of my entirely unredacted credit reports from PACER, where anyone could download my reports for 8 cents/page.  [My petition for rehearing / en banc re. Experian filing my unredacted credit reports]

I do NOT understand why Experian is allowed to report the status date as a month AFTER the discharge date.  Lawyers on drugs???

3) Consumers retain the right to dispute accounts incorrectly reported as discharged.

It is most important for FICO scores to have OLD positive accounts and established OPEN accounts.  Unfortunately, the CRAs have repeatedly REFUSED to remove the bankruptcy notations from mortgages and auto loans that were actually paid as agreed and NOT discharged.  The FICO scores can easily be lowered over 50 points by incorrect bankruptcy reporting.  In this order, the credit bureaus acknowledge that they know that incorrect bk reporting can be detrimental.

4)  They FAILED to address the Trans Union Date Closed.

Capital One is notorious for removing the date closed for discharged accounts or using a much more recent date closed.  The difference in FICO scores can exceed 80 points.

5) Incomplete reporting is EXPLICITELY allowed.

They explicitly ALLOW incomplete reporting of accounts without the date opened.

6) NO liquidated damages for violations of the order.

If they were SERIOUS about accurate reporting, we would have a clause with liquidated damages for failing to comply with the order.   After my preliminary analysis of the order, the primary benefit seems to be for lawyers in future litigation.

7) Implementation

September 1, 2008 with possible extensions to March 31, 2009.  I don’t know yet what the status is, have to check the docket.

CONCLUSION

There’s nothing exciting about this much hyped stipulated order other than to establish the POSSIBILITIES for accurate reports due to software automation.  There are SO many incorrectly reported accounts that could be automatically corrected or rejected by software.

Quite likely MANY accounts that were NOT discharged will be reported as discharged.

With so much more important incorrect reporting, it looks like this is a HUGE money maker for the plaintiffs’ attorneys who apparently don’t care about COMPLETE and ACCURATE reporting.  I question the ethics and/or competence of the attorneys.  Considering the NUMBER of attorneys involved, this is truly disappointing.

Consumers will still have to spend $50/person on myFICO credit reports after the discharge.

Consumers can wait 60 days after the discharge before ordering myFICO reports.  However, it is quite likely that disputes will need to be submitted anyway.

I also expect the CRAs’ software to IMMEDIATELY correct discharged accounts when the bk discharge public record is reported. There is absolutely no need to delay 60 days as it is done automatically by software.  But it’s possible that they’ll program the software to wait 60 days to ensure maximum inaccuracy as long as possible.

As always, ANALYZE the FICO score factors.

Don’t waste your clients’ money on frivolous disputes.  It’s important to have the accounts reported as discharged and to have the correct DATES.  Do NOT dispute accurate derogatory data or other irrelevant derogatory notations such as the charge-off status.

Consumers are experts at submitting frivolous disputes themselves and if all the IMPORTANT data is accurate, they can start disputing in hopes of getting the accidental deletions.

Make sure that your clients understand that deletions of discharged accounts may result in LOWER scores.

Sometimes those frivolous disputes backfire, causing accounts only on one report to be reported to all three CRAs or causing score lowering changes in the reporting.   I always annotate the clients’ derogatory accounts NOT to dispute because deletion would likely lower scores and I usually do NOT recommend frivolous disputes.  After all, it is quite likely that a credit bureau will revert to incorrect reporting, then refuses to correct and that a lawsuit has to be filed.  It is NOT helpful to have CRAs produce the frivolous disputes.

Definitions and highlights from the 36-page order:

Definitions

2.25 “Minor Derogatory” means an account rating or status of late by 30 to 119 days. If a Defendant does not, in its discretion, include “deed in lieu,” “voluntary repossession” or “voluntarily surrendered” as a Major Derogatory status for purposes of this Order, it shall so include them as a Minor Derogatory status.

2.26 “Major Derogatory” means an account rating or status of charge off, in collections, repossession, foreclosure, foreclosure proceedings started, skip cannot locate, paid by dealer, or any account rating or status of late by 120 days or more. Defendants may, at their discretion, also include an account rating or status of “deed in lieu,” “voluntary repossession” or “voluntarily surrendered” as a “Major Derogatory” status. “Major Derogatory” does not include Collection accounts.

Collection accounts are NOT a major derogatory? A deed in lieu or voluntary repo is NOT a major derogatory?

That’s NOT how Fair Isaac or creditors rate.

3.1 The requirements for the bankruptcy reporting of tradelines [retroactive scrubbing].

Defendants will make the changes identified in this section to all active Files, including, for Equifax, Files owned by CSC Credit Services, Inc., in the computer systems that they use to generate credit reports for commercial distribution; provided, however, Defendants may but are not obligated to update archived Files, except to the extent archived Files are accessed to generate current credit reports. Defendants will update each pre-bankruptcy judgment, tradeline, or Collection Account in such Files, or ensure that credit reports generated from such Files display, in accord with the procedures set forth below. In determining which set of procedures to apply to an entry, Defendants may make reasonable assumptions based upon other information within the File or provided by the Consumer.

… [judgments, installment accounts]

c. Pre-bankruptcy tradelines with a Metro 2 Portfolio Type of “R” (Revolving), “C” (Line of Credit) or “O” (Open Account) (or equivalent, or indeterminable) shall be treated as follows:

(i) The Defendant shall identify each tradeline in a File with a Metro 2 Portfolio Type of R, C or O (or such other Defendant specific or Metro 1 coding equivalent) that is reported with a “date opened” month that predates or is equal to the Bankruptcy Date and is not a Closed Account as of the Bankruptcy Date or, at the Defendant’s option, the date the scrubbing is accomplished.

(ii) From these tradelines, the Defendant shall undertake to exclude any tradeline that:

(A) is reported with a Metro 2 account code type (or such other Defendant-specific or Metro 1 coding equivalent) of 12 (Education), 50 (Family Support), 65, 66, 67, 68, 69, 70, 71 (Government Fine), 72, 73, 74, 75, 93 (Child Support), 94 (Spouse Support per Metro 1) or 95 (Attorney Fees);

(B) is reported with an account status reflecting a Chapter 7 bankruptcy;

(C) is reported with a Metro 2 Consumer Information Indicator of R (Reaffirmation of Debt) or 2A (Lease Assumption) or such other Defendant-specific or Metro 1
coding equivalent; and/or

(D) is reported with an indication that property was redeemed, voluntarily surrendered, or was subject to a deed in lieu of foreclosure.

(iii) For each tradeline not so excluded, the Defendant will change the tradeline according to the following rules:

(A) If the tradeline contains a DID that predates or is equal to the Bankruptcy Date and the Last Reported Status in the File is a Major Derogatory status, then the Defendant shall apply the Agreed Bankruptcy Coding;

(B) If the tradeline contains a DID that postdates the Bankruptcy Date and the Bankruptcy Date is on or any date up to six months preceding the date of the file output used to determine and accomplish the changes ordered herein and the Last Reported Status of the tradeline in the File is a Major or Minor Derogatory account status, the Defendant shall apply the Agreed Bankruptcy Coding; and

(C) If the tradeline contains a DID that postdates the Bankruptcy Date and the Bankruptcy Date is earlier than six months before the date of the file output used to determine and accomplish the changes ordered herein and the Last Reported Status of the tradeline in the File is a Major Derogatory status, the Defendant shall apply the Agreed Bankruptcy Coding.

(iv) The provisions of this Section 3.1(c) are not intended to apply to tradelines coded as Authorized User.

… [collections]

3.2 Prospective Relief Reporting Changes: [for new bk public record reporting after the scrub]

Defendants will make the changes identified in this section to Files of Consumers for whom Defendants receive notice of a Chapter 7 discharge after the retroactive scrub procedures described in Paragraph 3.1 have been fully implemented. Within 60 days of adding a public record entry reflecting a Chapter 7 discharge to a Consumer’s credit File, Defendants will update each pre-bankruptcy judgment, tradeline, or Collection Account in that File, or ensure that credit reports generated from such Files display, in accord with the procedures set forth below. In determining which set of procedures to apply to an entry, Defendants may make reasonable assumptions based upon information within the File or provided by the Consumer.

… [judgment, installment accounts]

c. Pre-bankruptcy tradelines with a Metro 2 Portfolio Type of “R” (Revolving), “C” (Line of Credit) or “O” (Open Account) (or equivalent, or indeterminable) shall be treated as follows:

(i) The Defendant shall identify each tradeline with a Metro 2 Portfolio Type of R, C or O (or such other Defendant-specific or Metro 1 coding equivalent) that is reported with a date opened that predates or is equal either to the month of or to the month prior to the Bankruptcy Date and is not reported in the File as a Closed count.

(ii) From these tradelines, the Defendant shall undertake to exclude any tradeline that, as of the Bankruptcy Date or, at the Defendant’s option, at the time the scrubbing is accomplished:

(A) is reported with a Metro 2 account code type (or such other Defendant-specific or Metro 1 coding equivalent) of 12 (Education), 50 (Family Support), 65, 66, 67, 68, 69, 70, 71 (Government Fine), 72, 73, 74, 75, or 93 (Child Support), 94 (Spouse Support per Metro 1) or 95 (Attorney Fees);

(B) is reported with an account status reflecting a Chapter 7 bankruptcy;

(C) is reported with a Metro 2 Consumer Information Indicator of R (Reaffirmation of Debt) or 2A (Lease Assumption) or such other Defendant-specific or Metro 1 coding equivalent;

(D) is reported with an indication that property was redeemed, voluntarily surrendered, or was subject to a deed in lieu of foreclosure; or

(E) is reporting either (a) in a Current Status or (b) with a $0 balance and in a status other than Major Derogatory.

(iii) For tradelines not so excluded, the Defendant shall apply the Agreed Bankruptcy Coding.

(iv) The provisions of this Section 3.2(c) are not intended to apply to tradelines coded as Authorized User.

d. Pre-bankruptcy Collection Accounts shall be treated as follows:

(i) The Defendant will identify each tradeline identifiable as a collection item (by means readily available, to include, by example only, account type, subscriber code, industry code, account status or account narrative), that is not reported in the File as a Closed Account, reaffirmed or as a “lease assumption” as of the Bankruptcy Date or, at the Defendant’s option, the date the scrubbing is accomplished with any of the following conditions: a DID that predates or is equal to the Bankruptcy Date, a date opened that predates or is equal either to the month of or to the month prior to the Bankruptcy Date, or a date referred to collection that predates or is equal either to the month of or to the month prior to the Bankruptcy Date.

..

I’ve rarely seen anything more bizarre.  3.1 and 3.2 assume that accounts are being reported ACCURATELY.  Nothing could be further from the truth.

The Date Opened does not have to be reported.

e. Nothing shall preclude a Defendant from applying the Agreed Bankruptcy Coding to a tradeline or Collection Account that would have qualified for inclusion in the Retroactive Scrub but for the fact that no information was available regarding when that tradeline or Collection Account was opened.

If the date opened isn’t “available”, why isn’t the account DELETED?

Why do the court and plaintiffs’ lawerys specifically CONDONE the INCOMPLETE reporting?

Make sure that accounts that were NOT discharged are NOT reported as included in bankruptcy

3.4 Override of Update Procedures:

a. If, either before or after a tradeline or Collection Account is updated pursuant to the procedures in Paragraphs 3.1 or 3.2, (a) a furnisher reports to the Defendant that a tradeline or Collection Account for that furnisher should not be reported with a status of included or discharged in bankruptcy through the use of a special Consumer Information Indicator (such as CII Code Q or a Metro I equivalent) or

(b) the Defendant determines that a debt in the tradeline or Collection Account was non-dischargeable, the Defendant may report such tradeline or Collection Account in a non-bankruptcy status, provided that the Defendant has not previously received truthful, objectively verifiable information directly from the Consumer in connection with a non-frivolous/non-irrelevant request for reinvestigation indicating the debt was in fact discharged.

b. If a Consumer submits a non-frivolous/non-irrelevant request for reinvestigation that claims a judgment, tradeline, or Collection Account updated by a Defendant to reflect a discharge pursuant to the procedures in Paragraphs 3.1 or 3.2 should not have been so updated because the judgment, tradeline, or Collection Account had not been discharged in bankruptcy, the Defendant may issue a Consumer Dispute Verification form (“CDV”) or Automated Consumer Dispute Verification (“ACDV”) to the relevant furnisher and, upon receiving the furnisher’s response to the CDV or ACDV, it may thereafter report information consistent with the information the furnisher provided.

Various dates including the most important STATUS date for Experian:

3.3 Bankruptcy Status Dates: Defendants will implement reasonable procedures designed to prevent updating the date of last update (Date Reported, Balance Date, Date Verified or, for Experian, date of status, last reported, and balance date) to a date that is more than one month after the Discharge Date in connection with an update of any tradeline, judgment or Collection Account pursuant to the procedures in Paragraphs 3.1 or 3.2; provided, however, that this provision shall not prohibit Defendants from reporting a later date of last update to reflect that information has been received from a furnisher on a date that is more than one month after the Discharge Date, whether or not such furnisher update is accepted or rejected pursuant to the procedures set forth in Sections 3.1, 3.2 and 3.4 of this Order; provided
further, however, that any such reporting of a later date of last update shall not change either the “Included in Bankruptcy” date or the “Purge Date.”

What were they smoking?

The CRAs will prevent updating the date of last update?

They can report the status date of a month AFTER the discharge? WHY? There can be NO other reason than to lower the credit scores LONGER.  The date of the most recent derog is THE most important data in after bk reports.  This will really hurt consumers within the first year of the discharge.

I have been requesting that Experian change the date of status to the FILING date and they often fixed that.  There’s no reason to use the DISCHARGE date other than to deliberately lower FICO scores.

The Experian STATUS DATE is extremely important and that was actually one of my own claims against Experian. However, Experian forced me to dismiss my entire case for the removal of my unredacted credit reports on the public record, see 10/3/08: My petition for rehearing / en banc re. Experian filing my unredacted credit reports

Why didn’t they include the most important Trans Union DATE CLOSED?

You have the right to dispute incorrect reporting

3.7 Preservation of Reinvestigation Rights: Nothing in this Order shall waive any Consumer’s right to request a reinvestigation pursuant to 15 U.S.C. § 1681i or excuse any Defendant from its going-forward obligations under 15 U.S.C. § 1681i, except as otherwise provided herein.

3.8 Nothing in this Order shall preclude Defendants from correcting erroneous reporting that a consumer has or has not filed for bankruptcy or has or has not received a bankruptcy discharge or to correct any reporting resulting from a furnisher’s coding error.

The credit bureaus KNOW how important it is to NOT report open accounts as included in bankruptcy.

5.2 Defendants believe that the new procedures will introduce some inaccurate, potentially harmful information onto the credit Files of certain 23(b)(2) Settlement Class members as well as those of certain Consumers who would be subject to the new procedures on a prospective basis. Defendants contend that this information may impair those Consumers’ creditworthiness, including their ability to use pre-bankruptcy accounts that they may have intended to exclude from the bankruptcy discharge and their ability to obtain new post-bankruptcy credit.

This should be helpful to consumers who have to SUE to get their open accounts reported as NOT discharged.

IV. TIMETABLE FOR IMPLEMENTATION OF REPORTING CHANGES

4.1 Defendants shall make reasonable and good faith efforts to implement the reporting changes contemplated herein prior to September 1, 2008. If a Defendant is unable to comply with this deadline for good cause, the Defendant shall receive a reasonable extension of time sufficient to permit implementation to be completed. Defendants shall work together in good faith to reasonably coordinate the timing of implementation. Notwithstanding these provisions, Defendants shall complete implementation of these changes on or before March 31, 2009.

I don’t know whether any extensions were granted.

18 Responses to “White v. Experian et al: CRAs must update SOME discharged accounts after bankruptcy filing”

  1. F White

    I’ve been reading about the case. Thought it mentioned something about how this ruling will preempt any future lawsuits over BK reporting.

  2. Correct. If the CRAs follow the prescribed procedures, they comply with the FCRA as far as reasonable procedures are concerned.

    Please read my post above for details about legal rights to dispute.

  3. Bankruptcy Lawyer

    [spam URL deleted]

    Experian is still using the discharge date instead of the filing date – is the applied unilaterally to everyone when dealing w/ Experian? Just curious as you’re right about this lowering FICO scores across the board, seeems pretty inane – but typical of credit reporting agencies.

  4. BTW, this is NOT a bk lawyer, but the thug tried to advertise a page with nothing but bk lawyer ads. It’s AMAZING what people come up with to spam their crap.

    Of course one only needs to READ my post to see that this is pure spam as I offer detailed comments on the subject in my above post.

    “I do NOT understand why Experian is allowed report the status date as a month AFTER the discharge date. Lawyers on drugs???”

  5. scott mabry

    Is there an alternate site posting your research on fdrs SInce your creditsuit site is down?

  6. Melissa

    Can someone tell me if the credit bureau’s can still reported “included in bankruptcy” “charge-off”? Do they have to delete late payments prior to bankruptcy? My biggest problem is with HSBC – they are duplicating that I filed BK – on 12/31/08, 1/12/09, 3/15/09 and 3/17/09. The actual date of filing was 6/7/07. Because of this Experian is extending how long the BK will stay on my report.

  7. I sued Experian for continuing to report the bk or charge-off INCORRECTLY. But then I had to DISMISS Experian to get them to delete my UNREDACTED credit reports from the public record (for download by ANYONE).

    I obviously didn’t want the whole world to see my entire credit reports with all my personal information. And, the court of appeals AFFIRMED, stating it is perfectly fine for credit bureaus to make the credit reports public when you sue them.

    When I posted that I was looking for judge Broomfield’s address to publicize, a US marshal visited me.

    That’s “justice” and “equal rights” in America.

    Anyway, my deposition of Experian employee Kimberly Hughes regarding the reporting is posted at CreditCourt.

    “Because of this Experian is extending how long the BK will stay on my report.”

    I don’t believe that. The BK reporting is based on the public record.

    I would start by submitting a FACTUAL dispute and then submitting a PUBLISHED FTC complaint if they don’t correct it.

    I’m currently setting up a new site for my DOCUMENTED complaints to demand ENFORCEMENT.

    We all know how Bush sucked and ordered the FTC to NOT enforce consumer protection laws, let’s see whether Obama brought any change.

    I’ll post here when the site is ready.

  8. Diane

    I received the post card to join in on this lawsuit back in October 2009. I had a judgment that was listed on my credit reports that never reached judgment as I already had filed for bk. I couldn’t get approved for even a prequalify mortgage because they stated I would have to pay the judgment prior to this from American General Finance-listed twice on my CRs – one for the judgement stating I owed $5000.00 and then listed under bad debts/derogatory accounts as charged off-$3000.00, the thing is it was a car loan and they received payment for the car as I sold it-the original loan was for $2500 and I sold the car for $2000.00 had made prior loan payments etc. 2 out of the 3 CRAs finally fixed it but Experian still shows it as a judgment and not that it was discharged in BK-that I still owe what they say as $5000.00-they only corrected the one listed under bad debts for $3000. Do you have any suggestions, should I go back to my bk attorney…this has been going on for 5 years now, me trying to get my credit reports updated. I have had good credit since-but that judgment is killing my score.

    • Diane, since “this has been going on for 5 years now”, I’d say it’s a little LATE to go back to your bankruptcy attorney.

      You seem to have a lot of things going on that happened many years ago and SHOULD not impact on your credit scores if reported CORRECTLY.

      “I couldn’t get approved for even a prequalify mortgage because they stated I would have to pay the judgment”

      Simply submit a FACTUAL dispute to Experian to require the “discharged” reporting.

      “but that judgment is killing my score.”

      There is NO way that this judgment is killing your score.

      Reporting the judgment as paid or discharged won’t give you a single FICO scores point and quite likely, even DELETION of the judgment won’t give you any FICO points because you have the more recent bankruptcy.

      Don’t confuse credit scores with mortgage lender requirements.

      JUDGMENTS have to be paid before you can get title insurance to buy a house even if NOT reported on your credit.

      The American General bad debt/derogatory account MIGHT be negatively impacting on your credit. But, I’d have to see the reporting.

      You mention that the account is not legit, again, simply submit a FACTUAL dispute to Experian.

      If Experian doesn’t correct the reporting of the account, sue Experian AND American General.

      But the JUDGMENT reporting is only the fault of Experian. They should automatically report the judgment as discharged.

      All too often it takes publication and/or a lawsuit to get the credit you deserve, see Credit Bureau Experian and DeVry Reporting False Late Payments and Refusal to Delete

  9. Kelly Foster

    Now that the 2-24-12 appeal deadline has passed, when should defendants expect to receive any monetary settlement?

    Thank You.

  10. I don’t know anything about a 2/24/12 appeal deadline. Please post a link and I’ll look into it.

  11. Kelly Foster

    Settlement Website
    http://www.BankruptcyDischargeSettlement.com

    IMPORTANT UPDATE: On August 12, 2011, a notice was filed with the Court to appeal the Order Granting Final Approval and the orders regarding attorney fees and costs. The deadline for Appellants to file their opening briefs with the Ninth Circuit Court of Appeals is January 23, 2012. Appellees must file their answering brief(s) by February 24, 2012.

    • 2/24/12 is not the appeal deadline, but the deadline for the appellees’ answering brief. There’s no way of telling how long it takes, there could be oral arguments, etc.

      It looks like your (the class) attorneys didn’t like the judge’s order regarding their attorneys fees.

  12. Johnny m Young

    I have yet to receive a dime from the class action suit…. i sent in all my forms…. to no-response

  13. Paul Presler

    The last time I looked into how this case is going on the web site bankruptcydischargesettlement.com. They never give detailed information on how the case is going or what party is appealing it? Also does the lawsuit money collected go into a trust and appied to the lawsuit?

  14. sue_w

    Any updates on the longest court case? Are they ever gonna reach a decision?

  15. I just looked at the settlement site at http://www.bankruptcydischargesettlement.com/court.php3

    “IMPORTANT UPDATE: On August 12, 2011, a notice was filed with the Court to appeal the Order Approving the Settlement and orders regarding the Motions for Attorneys’ Fees for Monetary and Injunctive Relief. Appellants filed their opening briefs with the Ninth Circuit Court of Appeals. Appellees must file their answering brief(s) by June 21, 2012.”

    It looks like they might still be waiting for a ruling from the appeals court. The PLAINTIFFS and OBJECTORS filed the appeal and I’d get the documents from PACER if I had more time and it wasn’t so aggravating to read those briefs.

    And I don’t know whether any money has been put into a trust and it doesn’t matter as the credit bureaus are unlikely to go bankrupt. The judges decide how much of the settlement goes to legal fees and how much goes to the class members.

Leave a Reply

RSS for Posts RSS for Comments