Wells Fargo Bankruptcy Credit Reporting $3M Class Action Settlement

Wells Fargo will pay $3 million as part of a settlement resolving a class action lawsuit that claimed the bank mishandled bankruptcy credit reporting.

The settlement benefits individuals who had a credit card account, direct auto account, home equity line of credit account, or personal line account with Wells Fargo that was charged off — meaning the grantor wrote the account off their receivables as a loss, and the account is closed to future charges, according to Experian — by Wells Fargo and sold to a third-party debt buyer on or after Jan. 1, 2009, and were discharged in Chapter 7 bankruptcy after the debt was sold but before March 16, 2020.

Wells Fargo is a widely used bank, despite its many scandals. In 2016, the bank was dragged through the news after it was revealed that Wells Fargo employees opened fake accounts for consumers in order to meet sales goals. Since then, the Federal Reserve has blasted Wells Fargo for its “pervasive and persistent misconduct” and “widespread consumer abuses.”

Consumers took further issue with the bank after it allegedly mishandled bankruptcy proceedings. In 2018, plaintiffs filed legal action against Wells Fargo claiming the bank failed to accurately update credit reports after consumers’ discharged debts through Chapter 7 bankruptcy were sold. 

Instead of reflecting the true nature of the previous debts, Wells Fargo allegedly reported the debts were sold, charged off, and had a $0 balance. Consumers argue that Wells Fargo should have indicated in its reporting that these debts were included in bankruptcy proceedings.

As a result of these reporting practices, the plaintiffs and other consumers allegedly faced lower credit scores and a diminished ability to seek credit. This reporting may have even resulted in consumers paying discharged debts in order to avoid credit ramifications, despite the debts being discharged.

Wells Fargo has not admitted any wrongdoing but agreed to pay $3 million to resolve the claims against it. 

Under the terms of the Wells Fargo class action lawsuit settlement, Class Members can collect two types of cash payments: reimbursement payments and distribution payments.

Reimbursement payments are available to Class Members who made payments on debts following Chapter 7 bankruptcy discharge. Payments will compensate these consumers for up to the full amount of their post-discharge payments. Class Members must support their claim with canceled checks, account statements, and other proof in order to receive this reimbursement.

Distribution payments are available to all Class Members, even if they did not make additional payments on discharged debts. Payments will vary depending on the net settlement fund after reimbursement payments are allocated and the number of valid claims filed by Class Members. No payment estimates are available.

The deadline for exclusion and objection is March 21, 2022. 

The final approval hearing for the settlement hasn’t been scheduled yet.

In order to receive payments from the Wells Fargo bankruptcy credit reporting settlement, Class Members must submit a valid claim form by March 21, 2022.

Who’s Eligible

The settlement benefits individuals who had an account with Wells Fargo that was charged off by the bank, sold to a third party after Jan. 1, 2009, and then discharged through Chapter 7 bankruptcy before March 16, 2022.

Potential Award

Varies

Proof of Purchase

Cancelled checks, account statements, or other similar proof.

Claim Form

NOTE: If you do not qualify for this settlement do NOT file a claim.

Remember: you are submitting your claim under penalty of perjury. You are also harming other eligible Class Members by submitting a fraudulent claim. If you’re unsure if you qualify, please read the FAQ section of the Settlement Administrator’s website to ensure you meet all standards (Top Class Actions is not a Settlement Administrator). If you don’t qualify for this settlement, check out our database of other open class action settlements you may be eligible for.

Claim Form Deadline

03/21/2022

Case Name

Ajasa v. Wells Fargo Bank, N.A., Adv. Proc. No. 1-18-01122-ess, in the U.S. Bankruptcy Court for the Eastern District of New York

Final Hearing

TBD

Settlement Website

AjasaSettlement.com

Claims Administrator

Ajasa v. Wells Fargo Bank, N.A.
Settlement Administrator
c/o Rust Consulting Inc – 7479
PO Box 2599
Faribault, MN 55021-9599
888-398-8213

Class Counsel

George Carpinello
Adam Shaw
BOIES SCHILLER & FLEXNER LLP

Charles Juntikka
CHARLES JUNTIKKA & ASSOCIATES

Defense Counsel

Jarrod D. Shaw
Benjamin J. Sitter
MCGUIREWOODS LLP