Miranda, a former United States Marine Captain, filed a Chapter 7 bankruptcy in August 2010 and received her discharge at the end of October 2010. In her bankruptcy filing, she named Mastercharge as one of her creditors. Her balance due on her Mastercharge account was $30,000. Mastercharge received notice of both the bankruptcy filing and the discharge. It did not object to her discharge.
In early 2011, Miranda checked her credit report. Although Mastercharge was properly reporting her debt as discharged, there was a $30,000 debt being reported by a company called Stride Credit Solutions. Miranda had never heard of the company, and filed a dispute with each of the three credit reporting bureaus. All three credit bureaus reported to Miranda that Stride Credit Solutions was claiming her debt was past-due and owing to Stride Credit Solutions. Miranda, through her attorney, provided each bureau with a copy of her bankruptcy discharge and list of creditors from her Chapter 7 petition. She assumed that doing so would clear up the problem.
About a month later, Miranda received a collections notice from Stride Credit Solutions. It stated that her account was several months past-due and offered her a one-time payoff amount of $10,000. Instead of paying off the account, Miranda contacted her attorney again. Miranda's attorney informed her that debt purchasers are common in the industry. Because so many people aren't aware of their rights, debt purchasers will buy discharged debts from other creditors and attempt to collect on those debts. The debts are purchased for a fraction of the balance due, which means that even collecting a small amount of money is profitable.
Miranda's attorney also informed her that in addition to being a discharge violation, he had identified several other claims based on the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA) and the Illinois Consumer Fraud and Deceptive Practices Act (ICFA). The attorney drafted an adversary proceeding complaint and filed it with the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division. In the complaint, her attorney alleged a violation of the bankruptcy discharge as well as violations of the FDCPA, the FCRA and ICFA.
About two weeks after Stride Credit Solutions was served with the adversary proceeding complaint, Stride's attorney filed a motion to dismiss the adversary proceeding. Miranda, through her attorney, responded to the motion. After oral argument on the motion, the bankruptcy judge denied Stride's motion. The next day, Miranda's attorney sent a settlement offer to Stride, requesting $25,000 in damages and his attorney's fees. After some negotiations between Stride's attorneys and Miranda's attorney, Stride agreed to pay a total of $30,000 to settle Miranda's claims. It also agreed to cease all collection and credit reporting activities on the debt.