The Southern District of West Virginia recently held that the reporting of an account being paid through a Chapter 13 bankruptcy plan as having an outstanding balance or past due payments does not violate the Fair Credit Reporting Act.

Plaintiffs Angela and Robert Barry alleged that Farm Bureau Bank FSB continued to report their account as having an outstanding balance with past due payments after they had disputed the account with the credit bureaus. Specifically, the Barrys alleged that their account is being paid through their confirmed Chapter 13 bankruptcy plan; thus, the account “should be showing paid on time through a Chapter [13] plan or it should stop as of the date of the filing [of] the Chapter 13 [confirmation], and indicate it is being paid through the plan.”

The Court granted Farm Bureau’s motion for summary judgment, answering the question of whether the FCRA prohibits the reporting of historically accurate information of a delinquent account after a Chapter 13 bankruptcy plan is confirmed but before the debt is discharged.

Farm Bureau argued the information it provided to the credit bureaus before and after the credit disputes was accurate. The Court agreed, ruling that the confirmation of a Chapter 13 bankruptcy plan does not change the debt’s legal status. For example, a Chapter 13 bankruptcy plan allowing payments “at a lower monthly rate does not concurrently insinuate that the account cannot become delinquent” because under the bankruptcy plan, payments are no longer being made according to the loan’s terms.

The Court relied on previous decisions from the Northern District of California in finding that a confirmed Chapter 13 bankruptcy plan does not absolve a debt owed to a financial institution because a bankruptcy petition could be dismissed if the debtor does not comply with the plan, resulting in the debt owed as if the bankruptcy was never filed. Therefore, the Court concluded that “it would not be inaccurate to report a debt’s balance as outstanding or the account as delinquent subsequent to a Chapter 13 plan’s confirmation, but before the debt has been discharged, if the debtor no longer makes the payments required under the loan schedule.”

Additionally, the Court rejected the proposition that the failure to report an account as included in a Chapter 13 bankruptcy proceeding is incomplete for purposes of the FCRA, holding that “even if Plaintiff is correct that Plaintiff’s credit report did not reflect the terms of Plaintiff’s Chapter 13 bankruptcy plan, this would not be an inaccurate or misleading statement that could sustain a FCRA claim … .”