Credit Damage Lawsuits Come in All Shapes and Sizes

Posted by kelseyemerson - March 12, 2011 - Credit - No Comments

We’re almost 3 months into 2011 and we’re on pace to match the record volume of FDCPA and FCRA lawsuits from 2010. We ended the year with over 12,000 consumer credit protection lawsuits, with the majority being FDCPA and FCRA suits. Of course, there were also countless lawsuits of another nature that included a credit damage claim.

I had a case out of Ohio that was a medical malpractice lawsuit. A woman was diagnosed, incorrectly, with cancer and after years of treatment, lost jobs, no healthcare coverage, and zapped saving’s accounts the truth was revealed. She never had cancer in the first place.

The problem is her credit report was now awash in medical collections and maxed out credit cards. This one was filed as a medial malpractice case, among other things, but had a garden variety credit damage component to it. A case like this would not be counted in the aforementioned 12,000 lawsuits because there was no FDCPA or FCRA cause of action.

I quickly realized I was not going to be their star witness. That honor went to an oncologist out of Texas was who going to testify as to the errors in initial doctor made when examinging and diagnosing the plaintiff’s medical condition. Point being, a credit damage claim doesn’t always have to involve a bank, collection agency or credit bureau.

I had another case out of Florida where the plaintiff was hit while driving to work. She was unable to continue working and had to begin living off of her credit cards. Her once modest credit card usage patterns suddenly shifted dramatically and began to look more like someone who used their cards excessively.

Her FICO credit scores went from the mid 700s to the mid 600s. The chance in score was because of a dramatic increase in credit card utilization. As the percentage went up, the scores went down.

There are, of course, thousands of garden variety FDCPA and FCRA lawsuits, which involve a creditor or a collector. And while many of them have merit, many of them do not. For example, I had a case out of Arizona where a consumer was claiming a collection agency was damaging her scores because they reported a collection on her credit reports.

She had a “plaintiff only” credit expert witness submit a report trying to paint the collection agency as a rouge collector guilty of malicious credit reporting. He neglected to acknowledge that the collection was rightfully being reported because she owed thousands of dollars of delinquent credit card debt. And, her credit was already being damaged by the 17 other unrelated collections and 6 unrelated charge offs, which were the real cause of her lower scores.


Commenting not available on this post.

This article should not be interpreted as legal advice or testimony. It does not represent any conclusive opinion of the author or any of the credit experts from