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Standard for Sanctions for Violating Discharge

Taggart v. Lorenzen, 139 S. Ct. 1795 (2019): The Supreme Court was asked to decide the standard to applied to determine whether or not a Court may impose sanctions for conduct that violates the discharge injunction.  The Supreme Court rejected both a subjective standard (preferred by the creditor) and strict liability (preferred by the debtor). The Court instead held that sanctions are appropriate “where there is not a ‘fair ground of doubt’ as to whether the creditor’s conduct might be lawful under the discharge order.”

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Discharge Denied When Debtor’s Case Fails the Smell Test

In re Wilson, 2016 Bankr. Lexis 995 (Bankr. D. Md. March 30, 2016) Robert Horace Wilson (“Debtor”), a practicing orthopedic surgeon, filed a Chapter 7 bankruptcy case to stay the collection efforts of his largest creditor (“Creditor”). Debtor’s nonfiling spouse (“Spouse”) also was a physician. In his original Schedules, Debtor disclosed monthly income of nearly $18,000 and ownership interests in a medical practice and an entity called Spike Club, LLC (“Spike”), which owned a gentlemen’s club. Those Schedules, which by Debtor’s admission were incomplete and inaccurate, also disclosed only minimal bona fide claims against him apart from Creditor’s claim and

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Report Must Contain an Inaccuracy to be Actionable Against Credit Bureaus

D. Maryland; 4/27/2017; Case No. TDC-14-1180 Ms. Alston filed a case against two credit bureaus for violations of 15 U.S.C. § 1681e and 1681i, failure to maintain procedures to assure maximum possible accuracy and failure to conduct a reinvestigation into dispute information, respectively. Unfortunately, this is one of many cases litigated by Ms. Alston involving the reporting of her Wells Fargo mortgage.  In a prior case against Wells Fargo, the Court decided that Wells Fargo’s reporting of her account as delinquent was accurate because the evidence established that Wells Fargo was entitled to collect payments from her during the period

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Failure to Mark Tradeline “Disputed” is a Violation of the FCRA

Hrebal v. Nationstar Mortgage LLC Case No. 17-cv-1815; D. Minn., June 14, 2019 The U.S. District Court granted summary judgment for the Plaintiff on a motion for reconsideration on the ground that the mortgage company negligently violated the Fair Credit Reporting Act when it repeatedly failed to report the consumer’s account as “disputed” in responses to the at-issue ACDV’s. The Court determined that there are no material factual disputes for a jury to resolve with respect to liability: the FCRA imposes liability on “furnishers” of consumer credit information, like Mr. Cooper, who fail to report that a loan delinquency is

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Duty to Investigate Dispute Remains Whether or Not Consumer Responds to Request for Information

Sponer v. Wells Fargo, et al. 3:17-cv-02035-HZ D. Ore – Portland Consumer/Plaintiff was victim of identity fraud – his ID was used to purchase a vehicle when he was out of the country.  Police arrested the man who used the Plaintiff’s identity, confiscated the stolen vehicle, and obtained a confession from thief.  Wells Fargo was notified of this by letter from the Plaintiff.  Wells Fargo contacted the police on multiple occasions who confirmed the underlying facts and who returned the vehicle to Wells Fargo. Despite this, Wells Fargo refused to remove the loan off of the Plaintiff’s credit report claiming

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Post-Filing Modification Prevents Student Loans From Being Discharged in Bankruptcy

Naffis v. Xerox Education Services, LLC AP No. 15-0078 February 6, 2019 Consumer sought to discharge student loans but after filing the bankruptcy, the consumer consolidated his loans, which made them a “post-petition” debt and therefore not dischargeable. The consumer then Amended his Complaint to add violations of the Fair Debt Collection Practices Act (“FDCPA”) and the Maryland Consumer Debt Collection Act (“MCDCA”) because the servicer persuaded him to consolidate his loans, causing him to lose the opportunity for discharge. The servicer, Xerox Education Services, LLC (“XES”) filed a motion for summary judgment. The Court held that because the student

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