If a debtor disputes a loan, the FCRA prohibits a creditor from reporting the loan to a credit bureau without also reporting the dispute. Assume that a creditor assembles a report of outstanding loans on Monday. Wanting to make sure that all the data is accurate, the creditor spends the week verifying the report and files it with the credit bureau on Friday. However, on Tuesday, the debtor’s lawyer faxed a dispute letter to the creditor. In February, a federal appeals court held that the creditor had violated the FCRA because it didn’t report that the loan was disputed.

Today’s Takeaway? Record all disputes immediately. Make sure that reports to credit bureaus are current as of the close of business on Day 1 and submit them first thing the morning of Day 2. That’s calendar days, not business days. Preparing a report as of Friday and submitting it on Monday is no good if the dispute was received on Sunday. Reporting the dispute one cycle late is not good enough - the court allowed the debtor a claim for statutory minimum damages plus legal fees, even though there was no actual damage.

Jay L. Hack is available at jlh@gdblaw.com.