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TJ, Esq.
TJ, Esq., Attorney
Category: Bankruptcy Law
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Experience:  Licensed to Practice Law
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I discovered that one of my banks had begun listing a dollar

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I discovered that one of my banks had begun listing a dollar amount (that I can see online only under certain circumstances) as a personal loan, even though I have no such debt with this bank. I researched this issue only to find that it was an amount that was discharged in a Chapter 7 BK about 20 years ago from another bank, which had been acquired by a second bank and then subsequently acquired by the current bank. This bank stonewalled me until I reached their legal department who abusively told me they had the right to show this debt on their records as long as they like. My assertion was that if they are listing this legally-discharged debt online tagged to me and my current accounts, that this was an attempt to collect, which I don't believe is allowed under federal law. Their assertion is that as long as they are not report this amount as a debt to the credit reporting agencies, they are within the law and there is nothing I can do about it. Who is correct?
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  TJ, Esq. replied 2 years ago.
Hello and thank you for allowing me the opportunity to assist you.

In my opinion, the bank is being a bit foolish and if I were its lawyer, I would tell the bank to remove any reference to the discharged debt. If you pushed the issue and asked the bankruptcy court to sanction the bank, then I'd say it's 50/50 whether the court would sanction the bank. However, if the bank listed the account as delinquent, then I think that the chances are much greater that the court would sanction the bank since the implication is that you need to take action to get the account so that it's no longer delinquent.

I dealt with a somewhat analogous issue recently when a client (a credit union) was planning to send a debtor statements which showed the balance of a discharged debt. In that case, I had the debtor agree in writing to receive the statements and to agree that it did not constitute an attempt to collect the discharged debt. The statements were sent because the debtor was continuing to pay down a discharged car loan in order to keep the car. So, I do think that in your case the bank is being stupid and it could cost the bank if you opt to ask the court for sanctions.

Does that answer your question? Let me know if you need clarification, and please remember to rate me positively so that I receive credit for my efforts.

Thank you and good luck!
Customer: replied 2 years ago.

For clarification: If I understand your detailed opinion correctly, I am walking a fine line by asking the court to sanction the bank for only listing the discharged amount as an existing loan balance, when they are neither sending me statements for this account nor displaying any notation on that account balance (online) that it is delinquent, especially if the bank isn't reporting this balance (and I obviously have to verify this) to the credit-reporting agencies. Am I correct in assuming that if I can produce credit reports even displaying that balance as a debt for the court, as opposed to only having a printed page from the bank's website showing that balance, that I would have a significantly better chance of prevailing in convincing the court to sanction the bank?


 


I also assume that if sanctioned, the only direct impact to me is that the bank would only have to cease listing the debt as an existing balance in my name. But, if I do find this discharged debt also exists as a current debt in my credit record, how likely am I to prevail in proving monetary damages (for perhaps being charged higher interest rates due to a lesser credit score, or supposedly having a higher personal debt than I do in reality) against a bank as large as Wells Fargo?

Expert:  TJ, Esq. replied 2 years ago.
Hi again.

Yes, I think you understand correctly. If sanctioned, however, the court would order the bank to pay you the fine (i.e., the court wouldn't keep it). If you can prove actual damages, then you could be awarded compensation for that as well. It may be difficult to prove actual damages, of course, since you'd somehow need to prove that (1) your credit rating was altered because of the listing of the discharged debt on your credit report, and (2) that the interest rates are higher as a direct result of the lowered credit rating. That may be difficult to prove.
TJ, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 9745
Experience: Licensed to Practice Law
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