Lawsuit: Equifax Inaccurately Reports on Debts Involved in Bankruptcy Chapter Conversions

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A proposed class action lawsuit out of Virginia alleges that Equifax Information Services, LLC inaccurately reports on debts that were discharged in bankruptcy proceedings.

Specifically, the suit claims Equifax fails to properly update credit information when bankruptcy petitions are converted from Chapter 13 to Chapter 7 filings. According to the complaint, when a Chapter 13 bankruptcy is converted to a Chapter 7, any debts that were incurred after the initial filing are discharged. Equifax, however, allegedly fails to update the status of debts incurred after chapter conversions and, instead, “erroneously and systematically” reports newly discharged debts as due and owing.

The consumer behind the case says she submitted car loan applications to several lenders who went on to obtain her Equifax credit report. The agency, according to the lawsuit, indicated that four of the plaintiff’s accounts were past due when, in actuality, the debts were discharged after she converted from a Chapter 13 to a Chapter 7 bankruptcy. The suit points out that Equifax did, in fact, update some of the plaintiff’s discharged accounts correctly and argues that “even simple automated processes” would ensure consistent reporting.

All told, the case alleges the agency failed to maintain procedures to ensure the maximum possible accuracy of the information it reports. The suit notes that Equifax has been repeatedly sued over the same issue yet has apparently refused to correct its alleged misconduct because crosschecking data would “reduce its bottom line.”