Summary:
In Bethea v. Equifax (W.D.N.C. Dec. 19, 2025), Judge Kenneth Bell offers both a procedural refresher and a cautionary tale for consumer litigants hoping to convert technical missteps into instant victory.
The plaintiff sued Equifax, Navy Federal Credit Union, and Goldman Sachs, alleging inaccurate and unauthorized accounts on his credit reports, along with failures to reasonably investigate disputes under the Fair Credit Reporting Act (FCRA) — and, for good measure, invoking the Gramm-Leach-Bliley Act (GLBA).
Navy Federal , the the largest credit union in the United States with about $191.8 billion in total assets, miscalculated its response deadline by four days. The Clerk entered default and the plaintiff moved for default judgment.
But the Court set aside the default, emphasizing that federal courts prefer deciding cases on the merits, particularly where the defendant acted promptly and the plaintiff suffered no real prejudice. The Court then dismissed the complaint — not on default grounds — but because it lacked factual specificity, lumped defendants together, and didn’t clearly explain what was inaccurate in the report. The GLBA claim failed outright because there is no private right of action.
The dismissal was without prejudice, allowing refiling — but only with specific allegations tied to each defendant.
Commentary: Courts Forgive Institutional Mistakes — But Are They Equally Forgiving to Consumers?
The Court’s reasoning here is doctrinally sound. Defaults are disfavored. Cases should be decided on the merits. A vague FCRA complaint shouldn’t proceed just because the defendant was four days late.
But the opinion also invites a harder question — one bankruptcy and consumer lawyers see every day:
Do courts extend the same patience to consumers who default?
Consider the contrast.
When creditors miss deadlines
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“Good cause”
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No prejudice
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Resolve on the merits
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Defaults set aside
When consumers miss deadlines
In debt collection suits, foreclosure proceedings, and even bankruptcy adversaries — consumers who:
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don’t file an answer within 30 days
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don’t respond to a motion
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misunderstand service
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are pro se and confused
often find themselves hit with:
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default judgments
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foreclosure orders
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wage garnishments
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liens
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sometimes years later discovering what happened
And courts frequently emphasize finality and procedural compliance, not “deciding claims on the merits.”
Yes, there are good judges who bend toward justice and give leeway — but those decisions are far less routine than the institutional forgiveness shown to banks, mortgage servicers, and national credit bureaus.
Why the asymmetry matters
Institutional defendants benefit from:
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Tall Building Lawyers
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calendaring systems
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in-house litigation teams
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repeat-player credibility
Consumers operate with:
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anxiety
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limited legal understanding
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chaotic financial and life circumstances
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no counsel in most collection cases
Yet the procedural expectations applied to each group often look identical on paper — and very different in practice.
⚖️ Could Navy Federal Have Sued Its Own Lawyers for Malpractice?
While it’s easy to say Navy Federal “dodged a bullet,” the reality is that the real exposure from the blown deadline lay not with the credit union, but with its lawyers. Missing a response date is classic malpractice territory — the duty is clear, the breach obvious, and the potential consequences severe. A further question is not whether Navy Federal could have sued its lawyers, but whether those lawyers had an ethical duty to recognize that their own potential liability created a conflict of interest requiring disclosure — and perhaps withdrawal. By missing the deadline, counsel became personally invested in persuading the court that the mistake was harmless and should be forgiven. That means their interests arguably diverged from Navy Federal’s, whose best option might have been independent advice about potential claims, strategy, and risk. At a minimum, that conflict should have been disclosed to Navy Federal; some would argue it should also have been candidly addressed with the court, and even with Bethea, to avoid any appearance that counsel was litigating primarily to protect themselves. Whether courts would actually require that level of transparency is another matter — but the issue reminds us that when procedural errors occur, lawyers are not just advocates, they may be witnesses and parties with skin in the game, and the rules of professional responsibility are supposed to account for that.
The lesson in Bethea:
This opinion is a reminder to:
1️⃣ Draft well-pleaded, fact-specific FCRA complaints.
2️⃣ Avoid relying on technical defaults as strategy.
3️⃣ Continue pushing courts to apply their “preference for merits decisions” consistently — including when consumers stumble.
If default is a disfavored “windfall,” that should be true whether the party asking for relief is Navy Federal — or a working family trying to save a home from foreclosure.
⚖️ Takeaway
Bethea is doctrinally correct — but it highlights an uneven playing field.
Creditors get grace. Consumers get judgments.
The challenge for consumer advocates is not simply litigating well-pleaded cases — but continuing to press courts to extend the same mercy to the people the system was supposedly built to protect.
To read a copy of the transcript, please see:
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