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Consumer Bankruptcy Law and Practice: 9.1 Introduction

Simply by filing a bankruptcy petition, a debtor brings to his or her aid an instrument of awesome breadth and power—the Bankruptcy Code’s automatic stay. Few other legal steps that may be taken on behalf of a consumer can bring about relief so simply, so effectively, and so dramatically. The stay provisions of the Code,1 along with the other related provisions that are discussed in this Chapter, take effect the instant a case is filed, from that moment placing the debtor and the debtor’s property under the protection of the bankruptcy court.

Consumer Bankruptcy Law and Practice: 7.1.5 Redaction of Personal Information

The Bankruptcy Rules and the Official Forms require that certain information be redacted in the forms that are filed with the court. Bankruptcy Rule 9037(a) requires that, unless the court orders otherwise, only the last four digits of a Social Security number or taxpayer identification number can be included in a filed paper.15 Similarly, only the last four digits of a financial account number may be listed. Only the year of an individual’s birth may be included.

Consumer Bankruptcy Law and Practice: 10.2.3.4.5.6 Delay of discharge

The 2005 Act added new subsections 727(a)(12), 1141(d)(5)(C), 1228(f), and 1328(h), which provide that the entry of the debtor’s discharge in a chapter 7, 11, 12, or 13 case may be delayed pending the outcome of any criminal and civil proceedings against the debtor referred to in section 522(q)(1).

Consumer Bankruptcy Law and Practice: 9.3.3.2.1 General application

Section 362(c)(3) of the Bankruptcy Code, added by the 2005 amendments, limits the stay under section 362(a) of the Code in an individual chapter 7, 11, or 13 case if the individual was a debtor in a case dismissed within the year before the filing of the petition.20 Because the provision applies to each debtor individually, the expiration or inapplicability of the stay as to one debtor does not apply to a joint debtor who has not filed a prior case.21 For debtors covered by this new restriction, th

Fair Credit Reporting: 10.2.3.1 Generally

The FCRA begins with Congressional findings and a statement of purpose, stating that the Act’s purpose is to require CRAs to adopt “reasonable procedures” for handling consumer information.75 Not surprisingly, whether a CRA or other entity has and follows reasonable procedures plays a role in many FCRA claims.

Fair Credit Reporting: 10.2.1.4 Private Remedies Against Users for Failure to Provide Required Notices Eliminated by Scrivener’s Error

The FCRA requires users of consumer reports to provide certain notices to consumers.44 These notices include notices of adverse actions based on consumer reports; notices to the consumer prior to an employer’s request for certain information; and notices relating to medical records, certain information used by affiliates, and government officials’ use of information for child support purposes.

Fair Credit Reporting: 10.2.2 Standard for Negligence

FCRA claims can be raised in a private action for either willful or negligent noncompliance with the Act,61 and the two may be pleaded in the alternative.62 This section focuses on the standard for FCRA claims based on negligent noncompliance. The issue of whether noncompliance is willful is discussed in the next chapter.

Fair Credit Reporting: 10.2.3.2 Bright Line Requirements

Some provisions of the FCRA impose bright line requirements. Negligent failure to fulfill one of these requirements gives rise to liability, no matter what procedures the defendant had in place to try to prevent violations.

Fair Credit Reporting: 10.2.3.3 Requirements to Maintain Reasonable Procedures

Some provisions of the FCRA are framed in terms of a requirement to maintain reasonable procedures to achieve or prevent something. For these FCRA provisions, the violation is the (negligent or willful) failure to maintain reasonable procedures, not necessarily the ultimate goal the provision is trying to achieve.

Fair Credit Reporting: 10.2.3.5 “Strict Procedures” for CRAs Reporting Adverse Public Record Information

A CRA that reports adverse public record information for employment purposes is subject to specific requirements under the FCRA. It must either notify the consumer that it engaged in such reporting or must maintain strict procedures to ensure that the information is complete and up to date.92 The CRA can defend against an allegation that it failed to send a notice by alleging that the CRA had instituted strict procedures, and vice versa.

Fair Credit Reporting: 10.4.1.2 Legislative History of Provision

Prior to the FCRA’s enactment, the traditional remedy for a consumer harmed by false consumer reports or investigative reports was to bring an action for libel. In addition, at the time the FCRA was enacted, the common law was changing and actions for invasion of privacy and negligence were beginning to threaten the consumer reporting industry.

Fair Credit Reporting: 10.4.2 Immunity Only Applies to the “Reporting” of Information

The limited immunity arises only when the consumer’s claim is “with respect to the reporting of information.”136 Accordingly, when the claim is based on other behavior, the immunity should not arise.137 For example, the immunity does not apply to an invasion of privacy claim premised on accessing a credit report without a permissible purpose.138 The immunity should not be available for claims based on the responsibilities of debt collectors that ar

Fair Credit Reporting: 10.4.4 Immunity Applies Only to Enumerated Tort Claims

The qualified immunity applies only to actions and proceedings in the “nature of” defamation, invasion of privacy, and negligence. Few cases discuss whether other torts are also in the “nature of” defamation, invasion of privacy, or negligence.162 However, a claim for slander of credit has been held to fall within the provision.163

Fair Credit Reporting: 10.4.5 A Furnisher of Information to an Entity Other Than a Consumer Reporting Agency Is Not Immunized

The qualified immunity provision expressly applies to “any person who furnishes information to a consumer reporting agency.”179 By these very terms, the immunity does not apply when the person furnishes information to someone other than a CRA.180 For example, the provision does not protect a creditor reporting its own experience with its customer to another creditor.

Fair Credit Reporting: 10.4.6.1 Standard for Malice or Willful Intent

The FCRA’s qualified immunity raises the consumer’s level of proof to prevail in state defamation, privacy, and negligence actions. The qualified immunity does not preclude these tort claims, but requires that the consumer prove that the defendant acted with malice or willful intent to injure, and that the reported information was false.183 The FCRA imposes higher standards than normally required under most if not all tort claims.

Fair Credit Reporting: 10.4.6.2 Sufficiency of Allegations of Malice or Willful Intent

In any case making a claim against a party that is eligible for section 1681h(e)’s qualified immunity, practitioners should plead malice or willful intent to injure. In general, such pleading should allow the claim to survive a motion to dismiss.193 Malice need not be plead with particularity, but can be averred generally.194 Of course, where plaintiffs are able to make specific allegations, they should do so.