When consumers are in debt, and close to filing bankruptcy, they should look to a late August 2011 case to learn about credit reporting. The United States Court of Appeals for the Third Circuit clarified the requirements for bringing a Fair Credit Reporting Act case for faulty credit reporting. In the Michele M. Simmsparris v. Countrywide Financial Corp. case, a New Jersey lawyer allegedly made a few late payments on her mortgage loan from Countrywide Home Loans.
In February 2008, SimmsParris, the attorney, found out Countrywide reported her as twice late. Her law firm sent a letter to Countrywide, stating it furnished false information. When Countrywide did not change the report, SimmsParris filed suit. The court ruled against SimmsParris for these reasons:
The Fair Credit Reporting Act does not provide a private right of action against a furnisher of credit information such as Countrywide except under limited situations. A private citizen cannot sue a furnisher unless a furnisher has been notified of the consumer’s dispute by a consumer reporting agency and fails to conduct a reasonable investigation.
The credit agency notifying a furnisher must be the same consumer reporting agency allegedly reporting the false information.
SimmsParris argued that when her law firm sent the notice to the furnisher, she met statutory requirements because her law firm sometimes conducts as a consumer reporting agency. The court found the FCRA required the agency to which the furnisher provided the allegedly false information to be the one that provided the notice to trigger any statutory duty.
The court decided: “To allow a consumer to bypass this structural framework by hiring a law firm that occasionally acts as a consumer reporting agency would interfere with this congressionally chosen path for creating liability. In doing so, it would cause furnishers of information to have to respond directly to consumers rather than to reporting agencies, and that would upset the balance enacted by the statute.”
Because SimmsParris did not comply with the statute she lost in her claim.
In New York, look to an experienced bankruptcy attorney for credit counseling.