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April 24, 1998

Mr. Michael Lovern, Sr.
8972 Quioccasin Road - Suite 172
Richmond, Virginia 23229

Dear Mr. Lovern:

David Medine asked me to respond to your Fax transmission of December 26, 1997, requesting our views concerning the legality under the Fair Credit Reporting Act (FCRA) of a credit bureau report of an account that has been discharged in bankruptcy as "charged off as bad debt." We acknowledge receipt of your request, pursuant to the Commission procedure set forth in 16 C.F.R. §2.2(a), for an investigation of the credit bureau.

Section 607(b) of the FCRA requires credit bureaus "to follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates." In our view, it is not a reasonable procedure to label an account that has been discharged in bankruptcy as "charged off as bad debt" if the account was open and not charged off when the consumer filed bankruptcy. Such a designation would be inaccurate or misleading, because it would indicate that the creditor had written off the account at the time of bankruptcy when it had not in fact done so.

Thank you for the information and documentation you submitted to us in connection with your request that we investigate this credit bureau's practices. As you may know, it is Commission policy not to comment on the status or existence of any nonpublic investigation.

The opinions set forth in this informal staff letter are not binding on the Commission.

Sincerely yours,

Clarke W. Brinckerhoff


David Medine

Jay Shaffer