The 7 Year Reporting Period For Delinquencies

[Pale Rider]

There have been some threads on many boards about what restarts the reporting period on a delinquent account. The following links clarify how a charge-off should be reported and when.

http://www.ftc.gov/bcp/conline/pubs/buspubs/infopro.htm

6. Reporting Delinquencies -- Section 623(a)(5).

If you report information about a delinquent account that's placed for collection, charged to profit or loss, or subject to any similar action, you must, within 90 days after you report the information, notify the CRA of the month and the year of the commencement of the delinquency that immediately preceded your action. This will ensure that CRAs use the correct date when computing how long derogatory information can be kept in a consumer's file.

How do you report accounts that you have charged off or placed for collection? For example:

*A consumer becomes delinquent on March 15, 1998. The creditor places the account for collection on October 1, 1998.

In this case, the delinquency began on March 15, 1998. The date that the creditor places the account for collection has no significance for calculating how long the account can stay on the consumer's credit report. In this case, the date that must be reported to CRAs within 90 days after you first report the collection action is "March 1998."

*A consumer falls behind on monthly payments in January 1998, brings the account current in June 1998, pays on time and in full every month through October 1998, and thereafter makes no payments. The creditor charges off the account in December 1999.

In this case, the most recent delinquency began when the consumer failed to make the payment due in November 1998. The earlier delinquency is irrelevant. The creditor must report the November 1998 date within 90 days of reporting the charge-off. For example, if the creditor charges off the account in December 1999, and reports this charge-off on December 31, 1999, the creditor must provide the month and year of the delinquency (i.e., "November 1998") within 90 days of December 31, 1999.

This is the only time the date of delinquency can be changed, when the account is brought current and then defaulted again.

*A consumer's account becomes delinquent on December 15, 1997. The account is first placed for collection on April 1, 1998. Collection is not successful. The merchant places the account with a second collection agency on June 1, 2003.

The date of the delinquency for reporting purposes is "December 1997." Repeatedly placing an account for collection does not change the date that the delinquency began.

*A consumer's credit account becomes delinquent on April 15, 1998. The consumer makes partial payments for the next five months but never brings the account current. The merchant places the account for collection in May of 1999.

Since the account was never brought current during the period that partial payments were made, the delinquency that immediately preceded the collection commenced in April 1998 when the consumer first became delinquent.

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http://www.ftc.gov/os/statutes/fcra/amason.htm

2. Is the reporting period extended if (A) the original creditor sells or transfers the account to another creditor, (B) the consumer responds to post-chargeoff collection efforts by making a payment on the debt, or (C) the consumer disputes the account with a CRA? Does it matter whether the 7-year period has expired when any of these events occurs?

No. In enacting the new provisions discussed above, Congress intended to establish a date certain -- 180 days after the start of the delinquency that led to the chargeoff -- to begin the obsolescence period. It did so to correct the often lengthy extension of the period that resulted from later events under the original FCRA. Enclosed are two staff opinion letters (Kosmerl, 06/04/99; Johnson, 08/31/98 ) that discuss the impact of these provisions, and the legislative history relating to their enactment, in more detail. Because the commencement of the seven year period is now described with some precision by the statute, it is our opinion that none of the subsequent events you listed -- sale of the charged off account by the creditor, or a payment on or dispute about the account by the consumer -- changes the allowable period for a CRA to report a chargeoff.

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http://www.ftc.gov/os/statutes/fcra/johnson.htm

We are not in accord with the contention that the date "when (the creditor) first reported" the chargeoff to the CRA constituted the start of the delinquency.

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http://www.ftc.gov/os/statutes/fcra/kosmerl.htm

1. As explained in the enclosed letter (Johnson, 8/31/98 ), it was Congress' intent in enacting Sections 605(c)(1) and 623(a)(5) to establish a single date -- the start of the delinquency -- to begin the obsolescence period on these accounts. This avoids the "multiple date" problem that arguably existed prior to the 1996 amendments. In the case you described, the date of the "commencement of the delinquency" that led to the creditor's chargeoff or collection action would be July 1991 or earlier (depending on how long the account was continuously delinquent before that). The seven year period would start no later than January 1992 (180 days later), with the result that the chargeoff or collection could no longer be reported in most cases beyond January 1999.

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FCRA

623 (a)

(5) Duty to Provide Notice of Delinquency of Accounts

(A) In general. A person who furnishes information to a consumer reporting agency regarding a delinquent account being placed for collection, charged to profit or loss, or subjected to any similar action shall, not later than 90 days after furnishing the information, notify the agency of the date of delinquency on the account, which shall be the month and year of the commencement of the delinquency on the account that immediately preceded the action.

605 (c) Running of Reporting Period

(1) In general. The 7-year period referred to in paragraphs (4) and (6)2 of subsection (a) shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.

[Pale Rider]

FTC Staff Commentary

1. Placement for Collection

A consumer's repayment agreement with a collection agency can be treated as a new account that has its own seven year period.

An example would be the collection agencies/JDBs who offer a credit card account to pay an old charge off account. If there is a new agreement, the account has its own 7 year period. The old account would still fall off your reports at the end of the 7 year period based on the Date of First Delinquency that led to the charge off or similar action.

FTC Staff opinion letter

August 24, 1984
Fred J. Marinucci, Esq.
Postsecondary Education Division
Office of the General Counsel
U . S . Department of Education
400 Maryland Avenue, S.W
Washington, D.C. 20202

...In cases where the student has entered Into a repayment agreement with ED pursuant to Section 3 of the Debt Collection Act of 1982, you propose to use the first collection contact by ED after the borrower defaults on that agreement as the date which starts the seven-year period.

In our opinion, the repayment agreement can be treated as a new account that has its own seven-year period under $ 6 0 5 (a) (4). However, a credit bureau that reports information on this basis may show only Information that relates to the borrower's payments to ED. There should be no entry on the credit report, such as "default repurchase", that indicates on its face or by implication that there was a default prior to the repayment agreement. Stated differently, this line of Information should reflect only Ed's experience with the borrower on this account and should contain no other adverse information. Of course, the credit bureau may also report the prior account (debt owed to the school or lender) and its history on another line, but that item of information will have its own seven-year period...

The new agreement with the collector cannot reference the old account, or the negative information contained in it, at all. This must be a seperate tradeline. If all payments are made per the agreement, it would actually be a positive tradeline. Well, unless the name of a ca on an account makes it negative. I don't think FICO would change, but possibly a manual review by a lender would score lower.

I believe this is useful information if you are entering into any type of settlement agreement. The data furnisher and CRA cannot hit you with the old negative information in the new account listing. They must report the new account correctly.

[Hedwig]

Good information!! Thanks, PR!

[Pale Rider]

I'm not sure why this one get confused, because it seems clear.

(3) Paid tax liens which, from date of payment, antedate the report by more than
seven years.

Tax liens can stay 7 years from the date of payment. It is best to pay them as soon as possible, because unpaid tax liens have no limitation for reporting.

1. Unpaid Liens

If a tax lien (or other lien) remains unsatisfied, it may be reported as long as it remains filed against the consumer, without limitation, because this subsection addresses only paid tax liens.

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This one is a little tricker.

(2) Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.

These items can stay for much longer than 7 years, depending on the SOL.

1. Operative Date

For a suit, the term "date of entry" means the date the suit was initiated. A protracted suit may be reported for more than seven years from the date it was entered, if the governing statute of limitations has not expired. For a judgment, the term "date of entry" means the date the judgment was rendered.

2. Paid Judgments

Paid judgments cannot be reported for more than seven years after the judgment was entered, because payment of the judgment eliminates any "governing statute of limitations" under this subsection that might otherwise lengthen the period.

[Pale Rider]

This was written some time back. If the information is outdated, please correct me.

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There are different reporting rules for Federal Family Education Loans (FFEL) or a Perkins Loan. FFEL's (including Stafford Loans, SLS Loans, and PLUS Loans) are owed to a lender, which are guaranteed by a guaranty agency and reinsured by the government. A Perkins Loan or National Direct Student Loan is owed to the school as the lender and may be assigned to the government if defaulted.

FFEL Loans may be included in credit reports from the latest of three dates as described below:

(f) Duration of authority

Notwithstanding paragraphs (4) and (6) [1] of subsection (a) of section 605 of the Fair Credit Reporting Act (15 U.S.C. 1681c(a)(4), (a)(6)), a consumer reporting agency may make a report containing information received from the Secretary or a guaranty agency, eligible lender, or subsequent holder regarding the status of a borrower's defaulted account on a loan guaranteed under this part until -

(1) 7 years from the date on which the Secretary or the agency paid a claim to the holder on the guaranty;

when the Secretary of Education or the guaranty agency pays a claim to the loan holder. This can take place months or years after default.

(2) 7 years from the date the Secretary, guaranty agency, eligible lender, or subsequent holder first reported the account to the consumer reporting agency; or

Whenever reported to CRA

(3) in the case of a borrower who reenters repayment after defaulting on a loan and subsequently goes into default on such loan, 7 years from the date the loan entered default such subsequent time

If the borrower starts paying after default and then defaults again.

Perkins Loans are not subject to any limit on reporting. But, Perkins institutions are required to report to CRA when borrower has made 6 consecutive monthly payments on defaulted loan, and disclose any changes to information previously disclosed.

[Pale Rider]

Payment to a collector never restarts the 7 year period. Payment to a collector does not create a seperate negative account that reports for a 7 year period different from the original creditor account. It is not possible to create or open a new account that is instantly negative.

[BIG TIME]

That's not what Rottie says!

[AntiPlastic]

Thanks for the clarification, as I am still new at repairing my credit, and have to consider if I want to dig up the past by making payments, and such

[jlynn]

Quote:

No. In enacting the new provisions discussed above, Congress intended to establish a date certain -- 180 days after the start of the delinquency that led to the chargeoff -- to begin the obsolescence period. It did so to correct the often lengthy extension of the period that resulted from later events under the original FCRA. Enclosed are two staff opinion letters (Kosmerl, 06/04/99; Johnson, 08/31/98 ) that discuss the impact of these provisions, and the legislative history relating to their enactment, in more detail. Because the commencement of the seven year period is now described with some precision by the statute, it is our opinion that none of the subsequent events you listed -- sale of the charged off account by the creditor, ora payment on or dispute about the account by the consumer -- changes the allowable period for a CRA to report a chargeoff.

Quote:

Payment to a collector never restarts the 7 year period. Payment to a collector does not create a seperate negative account that reports for a 7 year period different from the original creditor account. It is not possible to create or open a new account that is instantly negative.

Bumping for any lurkers.

[psaysofavril]

this information is invaluable, thanks.

[Pale Rider]

The issue of child support came up recently.

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§ 622. Information on overdue child support obligations [15 U.S.C. § 1681s-1]


Notwithstanding any other provision of this title, a consumer reporting agency shall
include in any consumer report furnished by the agency in accordance with section 604
[§ 1681b] of this title, any information on the failure of the consumer to pay overdue support
which


(1) is provided


(A) to the consumer reporting agency by a State or local child support enforcement
agency; or

(B) to the consumer reporting agency and verified by any local, State, or
Federal government agency; and


(2) antedates the report by 7 years or less.

[wolfe37]

Hi,

I'm so glad I found this before hooking up with a credit repair company. I have negative credit dating back to 1990 still on my credit report. I am having a very hard time trying to get this stuff off there so I can pay lower interest rates on loans etc. The recent credit I do have is stellar but that doesn't seem to matter because of all the old stuff. What would be my first step in clearing this up. I have gotten the run around from reporting agencies as to when it can be taken off.

Thanks so much

[jlynn]

7 years from when it became delinquent and was never caught up.

[wali720]

Thanks for this info, Thats exactly what i needed to know.

[grinwithin]

I spoke to a lawyer once and they said you have to look up the state of limitations for credit reporting. I know in NJ they can only haunt you for 6 years on everything (judgments 10). In other states it is broken down by secured vs. unsecure loans (mortgages vs. credit cards) and can run anywhere from a 2 year statue like in Maryland up to 15 years I think that was Mississippi.

I don't have the link handy on this PC at the moment, but I have a quick link somewhere. Will try to remember to post when I come across it.

[Hedwig]

There's a difference in the Statute of Limitations (SOL) for legally collecting a debt and the 7-year reporting period.

The reporting period is governed by federal law. The SOL does indeed vary from state to state. But even if a debt is past the SOL for collections, it can be reported for seven years.

[Ju2447]

Quote from RJM Acquisitions LLC
"When RJM reported this account, EXPERIAN told us that we must use December 13, 2006 (the date RJM purchased this account) as the opening date rather than the original opening date of June 5, 2003"
I've searched the forum but have not received a definite answer as to whether they can do this or not.
I disputed this charge when it was first made in 2003, I had closed the checking account because a teller refused to accept my daughter and husbands pay checks without me being present and showing my ID, I was bedridden and that was impossible, even though they had accepted them for over a year at that time, without me ever being present....and they still accepted electronic debits and charged me for them plus OD charges, after I told them to close the account...After they ran up the charges they called me and closed the account over the phone....
Any info would be appreciated.

[jlynn]

Quote:

Originally Posted by Ju2447 Quote from RJM Acquisitions LLC "When RJM reported this account, EXPERIAN told us that we must use December 13, 2006 (the date RJM purchased this account) as the opening date rather than the original opening date of June 5, 2003" I've searched the forum but have not received a definite answer as to whether they can do this or not.

Yes they can. The Date Opened should be the date that the collection agency opened the account, however, that has no affect on the Date of First Delinquency.

[tstms2003]

Quote:

Originally Posted by Pale Rider Payment to a collector never restarts the 7 year period. Payment to a collector does not create a seperate negative account that reports for a 7 year period different from the original creditor account. It is not possible to create or open a new account that is instantly negative.

Where can I find the law on creating a seperate negative account? It's being done to me.

Thanks