In 2009, a class action lawsuit brought in California challenged credit-reporting bureaus TransUnion, Equifax, and Experian with improperly reporting debts discharged in bankruptcy. The defendants (that is, the credit-reporting bureaus) eventually came to a settlement with the plaintiffs (the people responsible for bringing the suit), to the tune of $45 million.
The court approved the settlement by issuing an Order Granting Final Approval, but on August 12, 2011, the defendants filed a brief challenging that order, in regards to attorney fees and costs of the case. The result of this appeal won’t be known until at least later this year: the deadline for Appellants to file relevant briefs with the court is January 23, 2012, and Appellees have until February 24, 2012.
Will You Get Settlement Money?
The lawsuit was brought because Equifax, Experian, and TransUnion improperly reported debts that had been discharged in bankruptcy on consumers’ credit reports. Rather than noting that these debts were “discharged through bankruptcy,” the credit bureaus noted that they were “120 days late” or that they had been charged off by the credit issuer.
Incorrectly reporting the status of a debt is illegal (which is why the lawsuit was filed), but it also caused a lot of grief for the people affected. When a debt is still reported as active, debt collectors may try to collect on that debt.
The result was that people who had filed for bankruptcy and gone through the entire bankruptcy process precisely to eliminate their debts and stop getting hassled by debt collectors were having to deal with debt collectors anyway (along with the stress of trying to sort out why their credit reports were incorrect).
You are eligible to collect some of the settlement if…
- You are a member of the “class” represented by this class action case. To be a part of the class, you must have received a debt discharge under Chapter 7 AND had a credit report issued by one of the defendants (i.e. the three credit reporting bureaus) between March 15, 2002 and May 11, 2009 with incorrectly reported discharged debts.
- You must have submitted a claim form with relevant information no later than November 30, 2009.
If you missed the deadline, however, don’t worry too much. Even though the settlement amount seems large, it will be spread out over so many individuals that it likely won’t result to more than a few dollars per person.
If, however, you’re interested in exploring other legal options regarding errors on your credit report, you may want to consult with a lawyer about the recourse available to you.