On October 26, the Eastern District of Wisconsin issued a ruling dismissing a Fair Credit Reporting Act case. In Garland v. Marine Credit Union, the Court granted summary judgment in favor of the debt collector, holding the dispute was a legal issue such that the consumer could not establish a factual inaccuracy in the credit reporting.

The borrower, Sandra Garland, incurred debt to Marine Credit Union (“Marine”) and World Finance Corporation of Wisconsin (“World Finance”). Garland then filed an action under Section 128.21 of the Wisconsin Statutes to repay her debts over a three-year period. This Wisconsin statute allows a wage earner to file a suit in state court to amortize the repayment of debts they owe over a period of three years, much like a Chapter 13 bankruptcy, though they cannot be legally discharged under the statute. After completing the repayment plan, the state court entered an order stating that “each creditor had been paid 100% of their claim,” and directing the creditors named in the case, including Marine and World Finance, to “report their claim balance as zero.” Upon checking her credit report, Garland saw them both reporting a balance owed on the accounts to consumer reporting agencies (“CRAs”). After submitting a dispute to the CRAs, Garland then brought a suit against Marine, World Finance, and two CRAs, claiming they each violated the FCRA by failing to conduct a reasonable investigation into the credit dispute because they continued to report that money was owed on the accounts after the Sec. 128 proceeding. The defendants argued that they are not challenging the state court’s order in the Sec. 128 proceeding, but instead contend that any portion of the debts not included in the plan or which accrued after the plan was approved were still owed to the court. As such, a balance remained on the accounts.

In deciding Garland’s motion for summary judgment, the Court entered judgment in favor of the defendants, concluding that the Wisconsin Statute in question only applies to claims that arose prior to the proceeding and that were included in the amortization plan, but is silent as to interest or late charges, and cannot result in a discharge of the debt. The Court held that judgment was proper in favor of the furnishers and the CRAs, as there was no factual issue regarding the reporting on Garland’s credit report. The Court held that Garland’s claim was a legal dispute on the effect of the Sec. 128 proceeding to her overall debt, ruling:

[U]nless and until a proper tribunal concludes the Chapter 128 proceeding eliminated the debts in their entirety or that the plan precludes the accrual of post-filing interest and other penalties, Plaintiff cannot establish that the reported information is factually inaccurate. As a result, unless and until a proper tribunal concludes the Chapter 128 proceeding eliminated the debts in their entirety or that the plan precludes the accrual of post-filing interest and other penalties, [Garland] cannot establish the reported information is factually inaccurate. Accordingly, her claims fail as a matter of law.

This case, besides invoking a peculiar Wisconsin statute, does give some guidance to furnishers and CRAs defending lawsuits under the FCRA that arise from disputed legal issues. While the main holding of Garland is that, under the Wisconsin statute, debt repayment is a legal rather than a factual issue, when determining liability under the FCRA, there are many other situations where credit disputes involve analogous legal issues that are not appropriately resolved when investigating a credit dispute. Accordingly, such claims under the FCRA should likewise fail as a matter of law.