District Court Holds Arbitration Provision in Credit Card Contract Survives Discharge

District Court Holds Arbitration Provision in Credit Card Contract Survives Discharge

On May 1, 2019 the District Court for the Eastern District of Pennsylvania granted motions by Debtor’s discharged credit card lenders to compel arbitration of claims made under the Fair Credit Reporting Act.

The Debtor filed a chapter 7 bankruptcy and listed the three creditors at issue, First Premier Bank, OneMain Financial, and Citibank (Creditors). The Debtor received a discharge of these debts in November 2016.

In 2018, Debtor obtained his credit report from Trans Union which included outstanding debts owed to the Creditors. Debtor claims that there was no notation that the debts had been discharged in bankruptcy. Debtor submitted a dispute letter to Transunion, however neither Trans Union nor the Creditors have noted the bankruptcy discharge on the credit report and continue to report the debts as outstanding.

The Creditors filed motions to compel arbitration and submitted the contracts governing Debtor’s accounts. All three of the arbitration clauses at issue provide that the agreements will survive termination of or any changes in the account or the relationships between Debtor and the Creditors, including specifically the Debtor’s bankruptcy.

The Debtor argued that his bankruptcy rendered the agreements invalid and unenforceable. He argued that his bankruptcy discharged all of his obligations under the contracts including the obligations to arbitrate any claims against the Creditors.

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