Credit reporting or other personal consumer reports -- Incorrect information on your report -- Complaint #8898700
Consumer disputes inaccurate 'charge off' reporting and potential tax implications with Bread Financial
Complaint Overview
Complaint ID: 8898700
Company: Bread Financial Holdings, INC.
Product: Credit reporting or other personal consumer reports
Sub-Product: Credit reporting
Issue: Incorrect information on your report
Sub-Issue: Account status incorrect
State: Florida
ZIP Code: 33023
Date Received: 2024-04-30T12:00:00-05:00
Date Sent to Company: 2024-04-30T12:00:00-05:00
Company Response: Closed with non-monetary relief
Timely Response: Yes
Consumer Disputed: N/A
Submitted Via: Web
Risk Assessment
Risk Level: high
The complaint involves multiple alleged inaccuracies on a credit report, potential violations of the Fair Credit Reporting Act (FCRA) and Fair Debt Collection Practices Act (FDCPA), and significant financial implications (taxable income). The consumer's assertion of not being liable for the debt adds complexity.
Consumer Sentiment: frustrated
Topics: credit-reporting, incorrect-account-status, charge-off, bread-financial, fcra, f செறிவுdcpa, taxable-income
AI Analysis
It appears you're dealing with a complex situation where Bread Financial Holdings, Inc. has reported an account on your credit report as 'charged off.' You believe this is incorrect and has led to other inaccuracies, such as late payments and incorrect dates, being reported. A key concern you've raised is that a charge-off, under IRS rules, can be considered forgiven debt and may necessitate a Form 1099-C, which could create taxable income. You're also asserting that this charged-off debt, which you believe you're not liable for and have no contract with the current collector, is being reported inaccurately and negatively on your credit report, potentially violating consumer protection laws. This matters significantly because inaccurate information on your credit report can severely impact your ability to obtain loans, rent housing, get insurance, and even secure employment. The reporting of a charge-off, especially if it's not legitimate or is being handled improperly, can be a major derogatory mark. While charge-offs are a common, albeit negative, reporting item, the specific nuances you've described – the potential IRS implications, the dispute over liability with a subsequent collector, and the alleged reporting of multiple inaccuracies beyond just the charge-off status – suggest a potentially mishandled account. The company's response of 'closed with non-monetary relief' indicates they addressed the complaint but did not offer financial compensation, which might mean they made corrections to the report but didn't agree with your broader claims about tax implications or liability. For others in similar situations, this highlights the importance of scrutinizing every detail on credit reports and understanding the implications of different account statuses. It also underscores the need to challenge inaccuracies vigorously, especially when tax implications or disputes over debt ownership arise. The outcome for you will depend on your ability to prove the inaccuracies and the applicability of the laws you've cited.
Consumer Narrative
A creditor or furnisher listing an account as Charge off status is considered by the IRS as canceled or forgiven debt. The creditor or furnisher must issue the consumer a 1099c form. Which turns an account into taxable income for consumer. And, income can not be reported on a consumer report and also can not be listed as derogatory.This account is also reporting inaccurately. 15 U.S. Code 1666b ( a ) states a creditor may not treat a payment on a credit card account under an open end consumer credit plan as late for any purpose. Attached you would see proof of this account reporting inaccurate information such as late payments, open dates, date of last activity, dates of last payments, wrong credit limits across the bureaus and credit limit amount.This account is still reporting negatively on my consumer report even though it was sold/transferred to another lender/collection agency to collect on this CHARGED OFF debt which I am not liable for nor have a contract with XXXX XXXX XXXX violating 15 usc 1692a ( 4 ) . 15 USC 1692a ( 5 ) states the term debt means any obligation or alleged obligation of a consumer to pay money arising out of a transaction. I do not owe any debt, especially if an account is already CHARGED OFF. I as a consumer have the right to privacy.
What You Should Do -- Consumer Action Plan
1. **Gather all documentation:** Collect all statements, payment records, correspondence with Bread Financial and any subsequent collectors, and copies of your credit reports showing the disputed information. 2. **Send a formal dispute letter:** Write a detailed dispute letter to each credit bureau (Equifax, Experian, TransUnion) that is reporting the inaccurate information. Clearly state what information is incorrect (account status, dates, credit limit, etc.) and reference the specific laws you believe are being violated. Include copies of your evidence. Send this via certified mail with return receipt requested. 3. **Request a Form 1099-C from the creditor:** If you believe the debt was forgiven and a 1099-C should have been issued, formally request it from Bread Financial (or the original creditor if Bread Financial is just the servicer). If they refuse or fail to provide it, note this refusal. 4. **File a complaint with the CFPB:** If you haven't already, or if the company's response was unsatisfactory, file a detailed complaint with the Consumer Financial Protection Bureau (CFPB) online. Reference your previous complaint and the company's response. 5. **Consider contacting the IRS:** If you believe a 1099-C was required but not issued, consult with a tax professional and potentially contact the IRS for guidance on how to handle the potential taxable income situation.
Legal Context & Consumer Protection Laws
The Fair Credit Reporting Act (FCRA) governs the accuracy and privacy of credit reports. It requires furnishers of information (like Bread Financial) and credit bureaus to investigate disputes and correct inaccuracies. The Fair Debt Collection Practices Act (FDCPA) protects consumers from abusive, deceptive, and unfair debt collection practices, which may be relevant if a third party is attempting to collect a debt the consumer disputes or is not liable for. The Internal Revenue Code (IRC) dictates when forgiven debt is considered taxable income and the requirement for issuing a Form 1099-C.
Regulatory Insight
This complaint touches upon common issues in credit reporting, particularly regarding the accuracy of account status and the handling of charged-off debts. The CFPB has previously taken action against companies for inaccurate credit reporting and improper debt collection. The interplay between credit reporting and tax implications (like the 1099-C) is a complex area that regulators monitor, as errors can lead to significant financial harm for consumers.
Resolution Likelihood
40%
State-Specific Consumer Protections
Florida law provides general consumer protections, but the primary laws governing this complaint are federal. Consumers in Florida can also file complaints with the Florida Attorney General's Office, which oversees consumer protection matters within the state.
Industry Comparison
Bread Financial's response of 'closed with non-monetary relief' is a common outcome for credit reporting disputes where the company corrects specific errors but doesn't offer financial compensation. This aligns with industry norms, though the effectiveness and thoroughness of investigations can vary significantly between companies.
Related Issues
Frequently Asked Questions
How can I dispute incorrect information on my credit report?
To dispute incorrect information on your credit report, you should first identify the specific inaccuracies. Then, write a detailed dispute letter to each credit reporting agency (Equifax, Experian, TransUnion) that lists the incorrect information. Clearly state what is wrong and why, providing any supporting documentation you have (e.g., statements, payment records). Send the letter via certified mail with return receipt requested. You should also notify the company that furnished the information (in this case, Bread Financial) about the dispute. The credit bureaus have 30 days (or 45 if you provide additional information within that timeframe) to investigate your dispute and correct any verified inaccuracies.
What are my rights if a debt is reported as charged off but I don't owe it?
If a debt is reported as charged off and you believe you are not liable for it, or if the reporting is inaccurate, you have rights under the Fair Credit Reporting Act (FCRA). You can dispute the charge-off with the credit bureaus and the furnisher (Bread Financial). If a third party is attempting to collect the debt, they may be subject to the Fair Debt Collection Practices Act (FDCPA), which prohibits collecting debts that are not valid or that the consumer does not owe. You can request debt validation from the collector. If the debt was indeed forgiven and should have resulted in a Form 1099-C, you may have rights related to proper tax reporting under the Internal Revenue Code.
Should I file a complaint with the CFPB or FTC?
Filing a complaint with the Consumer Financial Protection Bureau (CFPB) is highly recommended for issues related to credit reporting, debt collection, and other financial products. The CFPB collects complaints, works to get responses from companies, and uses complaint data to identify patterns of misconduct for potential enforcement actions. The Federal Trade Commission (FTC) also handles consumer protection complaints, particularly those related to fraud, identity theft, and unfair business practices. For credit reporting inaccuracies and debt collection issues, the CFPB is often the primary agency to contact, though filing with both can sometimes be beneficial.
What is Bread Financial's track record with credit reporting disputes?
Bread Financial, like many large financial institutions, receives a significant volume of complaints related to credit reporting and debt collection. While specific track records can fluctuate, common themes in complaints often involve disputes over account accuracy, payment posting, and the handling of charged-off accounts. Their response of 'closed with non-monetary relief' suggests they address reported issues by making corrections rather than offering financial settlements, which is a standard approach but doesn't always satisfy consumers with complex grievances.
What are my next steps if Bread Financial doesn't resolve my dispute?
If Bread Financial does not adequately resolve your dispute after you've formally notified them and the credit bureaus, your next steps could include escalating the issue. You can file a more detailed complaint with the CFPB, potentially including evidence of their inadequate response. You might also consider sending a formal demand letter, possibly drafted with the help of a consumer protection attorney, outlining the specific violations and demanding correction. If tax implications are a major concern, consulting with a tax professional and potentially the IRS is advisable. In some cases, pursuing legal action in small claims court or a higher court might be necessary.
How does an inaccurate charge-off affect my credit score?
An inaccurate charge-off can significantly lower your credit score. A charge-off is a serious negative mark, indicating that the creditor has given up on collecting the debt and wrote it off as a loss. This typically results in a substantial drop in your score. Furthermore, if other inaccuracies like late payments, incorrect dates, or wrong credit limits are reported alongside the charge-off, they compound the negative impact. Removing inaccurate negative information, especially a charge-off, can lead to a substantial improvement in your credit score over time.
Can I join a class action lawsuit over credit reporting errors?
It is possible to join a class action lawsuit if a company's widespread practices have led to numerous consumers experiencing similar harm, such as consistent credit reporting errors. To determine if a class action lawsuit exists or is being formed for issues related to Bread Financial or similar credit reporting problems, you would typically need to consult with a consumer protection attorney specializing in class actions. Websites that track class action lawsuits or legal news outlets may also provide information. Filing individual complaints with the CFPB and FTC can help regulators identify patterns that might lead to broader enforcement actions or facilitate class action settlements.
Disclaimer
This analysis is generated by an AI and is for informational purposes only. It does not constitute legal advice. Consult with a qualified legal professional for advice specific to your situation.