On February 25, the U.S. District Court for the Western District of Arkansas granted a student loan servicer’s motion to dismiss and denied a borrower’s motions, dismissing without prejudice a dispute over student loan debt collection and credit reporting. The plaintiff borrower alleged fraud, violations of Arkansas statutory law, and violations of the FDCPA, claiming the servicer lacked standing to collect her loans due to deficiencies in proofs of claim filed during her 2013 Chapter 13 bankruptcy. According to the opinion, the bankruptcy court had twice sustained the borrower’s objections after finding supporting documentation insufficient, but she voluntarily dismissed her petition in 2015 without a confirmed repayment plan or disbursement to creditors. The court held that these bankruptcy rulings did not void the debt for three reasons: (i) sustaining an objection does not permanently bar a creditor from establishing a claim; (ii) the lack of a completed Chapter 13 plan means no permanent change to contractual rights occurred, thus failing to satisfy the threshold requirement; and (iii) student loans are generally nondischargeable under Chapter 13.

The court found the fraud and Arkansas statutory claims failed because the plaintiff had not shown justifiable reliance on any alleged misrepresentation, instead disputing their truth and basing harm on reliance by third parties. As to claims involving state identity fraud and forgery statutes, the court ruled they either lacked private enforcement or factual support, and further that the Arkansas Deceptive Trade Practices Act claims failed for lack of actual loss tied to reliance.

The court dismissed the FDCPA claims, finding the plaintiff did not allege her loans were in default when obtained by the servicer, thereby failing to allege that the servicer qualified as a “debt collector” under 15 U.S.C. § 1692a(6)(F). In denying leave to amend, the court concluded amendment would be futile given prior admissions, because any reliance-based payment claims would be time barred, and because alleging default at the time of acquisition could implicate Rule 11(b) in light of the plaintiff’s prior admission that she had made payments on the loans before filing for bankruptcy. It also rejected her motions seeking to declare the defendant in noncompliance with a prior production order, to compel production of loan-specific documentation with sanctions, and for clarification of the scope of the court’s prior order, noting the defendant had complied with its obligations.