A District Court judge in Illinois has denied an auto finance company’s motion to dismiss a Fair Credit Reporting Act claim, rejecting all four of the arguments the furnisher raised and finding that a consumer plausibly alleged her account was reported as discharged in bankruptcy when she had actually paid it on time the whole way through.
The background: The plaintiff took out an auto loan in June 2018 to finance the purchase of a vehicle. She filed for Chapter 13 in July 2022 and her plan was approved that September. The account stayed open during the bankruptcy, and she continued making regular, timely payments directly to the defendant throughout the proceedings. Her bankruptcy was discharged on January 31, 2025. Two months later, the trustee filed a final accounting report showing that no disbursements were ever made to the defendant through the bankruptcy.
- In June 2025, the plaintiff pulled her credit reports and found the account carrying a bankruptcy status.
- She disputed with two credit reporting agencies that October, explaining that the account was not included in her repayment plan, that the defendant had never received any payments through the bankruptcy, and that she had made all of her payments on time.
- The bureaus sent ACDVs. One bureau verified the information as accurate and reported the account as “discharged through Chapter 13 bankruptcy.” The other never responded.
- Reports pulled again in November 2025 showed the same status. She sued the furnisher under Section 1681s-2(b) of the FCRA.
The ruling: Judge Mary M. Rowland of the District Court for the Northern District of Illinois held that alleging false information was passed to third party bureaus and landed in the plainitff’s credit files is a reputational harm close enough to defamation to be a concrete injury for the purposes of asserting standing.
- The judge was less patient with the furnisher’s inaccuracy argument. The defendant attached bankruptcy schedules showing it was listed as a creditor, which Judge Rowland called “a non sequitur.” Whether the defendant was a creditor “is not in dispute.” The allegation was that it reported the account as discharged, and the defendant “identifies nothing indicating” that it was.
- The judge also refused to treat this as a legal dispute the furnisher had no duty to resolve, noting that furnishers “are tasked with accurately reporting liability” because “they are in a better position to determine the legal validity of a debt.” As she put it, “No legal analysis was required if [the creditor] incorrectly reported that the account was ‘discharged’ rather than merely ‘included’ in the bankruptcy.”
