While Debtor’s Obligation to Pay Creditor was Discharged in Bankruptcy, Arbitration Agreement with Creditor Survived

While Debtor’s Obligation to Pay Creditor was Discharged in Bankruptcy, Arbitration Agreement with Creditor Survived

Plaintiff  alleges various violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., and the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. The claims arise from Plaintiff’s discovery that several debts that had been discharged in his Chapter 7 bankruptcy were still appearing on his consumer credit reports. Defendant Credit One Bank, N.A. moves to partially stay this action and compel arbitration pursuant to an alleged arbitration agreement between Plaintiff and Credit One.

In May 2016, Plaintiff completed an application for a credit card on Credit One’s website, which stated the terms and conditions applicable to the credit card. Thereafter, Credit One mailed Plaintiff the credit card, along with the Cardholder Agreement, Disclosure Statement and Arbitration Agreement.  Plaintiff eventually activated his card and began making charges to it.

In October 2016, Plaintiff filed for Chapter 7 bankruptcy. As a result of the bankruptcy proceedings, several of Plaintiff’s debts were discharged, including a debt he owed to Credit One stemming from his use of its credit card.  Thereafter, Plaintiff began regularly monitoring his consumer credit reports.  In doing so, he discovered several debts on his credit reports that had been included and discharged in his Chapter 7 bankruptcy.  One such debt was the balance he previously owed to Credit One.

Plaintiff asked credit-reporting agency Equifax Information Services, LLC to investigate the inaccuracies.  In the present lawsuit, Plaintiff claims that upon receiving notice from Equifax of his dispute, the defendants failed to conduct a reasonable investigation concerning the misreported debts, in violation of various provisions of the FCRA and FDCPA. Originally named as defendants were Equifax Information Services; Credit Bureau Systems, Inc.; Credit One Bank, N.A.; Fort Knox Federal Credit Union; and Hillcrest Credit Agency. Plaintiff  has since voluntarily dismissed his claims against Hillcrest Credit Agency  and settled his claims against Equifax Information Services. Credit One moves to partially stay the action and compel arbitration in accordance with an arbitration agreement that Plaintiff allegedly entered into when he began using the credit card at issue.  In his response to Credit One’s motion, Plaintiff does not argue that the agreement is generally unenforceable or that his claims fall outside its scope.  Instead, he argues that the discharge of the debt at issue in Allen’s Chapter 7 bankruptcy renders the arbitration agreement unenforceable.

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Allen v Equifax (WD Kentucky)

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