All three credit bureaus also named — and allegedly deleted tradelines instead of fixing them
Freedom Mortgage faces a new federal lawsuit accusing it of fumbling credit reporting duties after a borrower's Chapter 13 bankruptcy discharge.
The suit, filed April 3, 2026, in the U.S. District Court for the District of New Jersey, names Freedom Mortgage Corporation alongside all three major credit bureaus — Equifax, Experian, and Trans Union. The plaintiff, Anthony Paschal, a Georgia homeowner, alleges that after completing a Chapter 13 bankruptcy in January 2025, the defendants failed to properly update mortgage tradelines — despite Paschal having made timely payments on the loan throughout and after the bankruptcy.
At the heart of the case is a question mortgage servicers know well but don't always get right: what happens to credit reporting when a borrower comes out of Chapter 13 with the mortgage still intact?
According to the lawsuit, Paschal took out a mortgage in March 2018, filed for Chapter 13 protection in November 2019, and received a discharge on January 23, 2025. The mortgage — serviced at various points by Freedom Mortgage and later by PHH Mortgage Corporation — was excepted from discharge, meaning Paschal continued to owe on it and continued to pay. The suit states that timely monthly payments were made before, during, and after the bankruptcy.
But when Paschal pulled a three-bureau credit report in September 2025, the picture painted by the data didn't match reality, the suit claims. The Freedom mortgage tradeline was flagged as "derogatory" across multiple bureaus, with creditor remarks still referencing the Chapter 13 bankruptcy months after the discharge. Trans Union allegedly went a step further, failing to report any balance or monthly payment amount on the PHH account — even though Paschal was actively paying on it.
Industry standards known as the Metro 2 guidelines, maintained by the Consumer Data Industry Association and adopted by all three bureaus, lay out a clear process for handling exactly this scenario. After a discharge, furnishers and bureaus are supposed to strip out bankruptcy references and suppression codes so that a borrower's ongoing payments can be accurately reported. The lawsuit alleges none of that happened here.
When Paschal disputed the errors in October 2025, the response was arguably worse. Rather than investigating and correcting the data, all three bureaus allegedly deleted the disputed tradelines altogether — wiping out mortgage accounts without explanation. The suit notes that Equifax managed to fix the PHH tradeline accurately, yet deleted the Freedom mortgage and a Mariner Finance account rather than applying the same correction.
The case, brought under the Fair Credit Reporting Act, accuses Freedom Mortgage of failing to conduct a reasonable investigation after being notified of the dispute, and accuses the bureaus of ignoring their obligation to forward disputes to the furnisher. It seeks actual, statutory, and punitive damages.
No answers have been filed, and no court has made any determination on the merits. But for mortgage servicers, the case is a timely reminder: post-bankruptcy reporting is not just a back-office task. When Metro 2 codes go unupdated and disputes get handled with a delete key instead of an investigation, the exposure is real — and it lands in federal court.
