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Advice on dealing with old and charged off debt accounts - The Bills.com Blog
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Advice on dealing with old and charged off debt accounts
Friday, Jan 18, 2008
Question: I have a lot of OLD debt. A lot are old charge-offs and my credit report only shows the collection company's debt and not the original debt. How do I find that out if they show to be open when the collection company bought the debt. Should I contact the collection agency? What should I do to find out how old the debt is and when it will come off my credit? I have been living with this for years and I would like to take care of it. What would be the best way to go about this? Thank you.
Answer: You are correct in thinking that most debt will be removed from your credit report seven years after the date of charge-off. The term "charge-off" is an accounting term used by creditors, meaning that a creditor has transferred an account from its "accounts receivable" books to its "bad debt" ledger. Credit card issuers are required to do this by the federal Office of the Comptroller of Currency, in an attempt to prevent banks from inflating future earnings statements with old and defaulted accounts. For the consumer, the only real consequence of an account charging off is the account will report as a negative item on the consumers' credit reports. As I mentioned previously, charge-off accounts are required to be removed from your credit report seven years after the date of charge-off, so these old accounts will not damage your credit rating indefinitely.The best way to determine the charge-off date of an old debt is to obtain a copy of your credit report from each of the three major credit reporting
agencies –- Equifax, Experian, and TransUnion. Your credit reports should list the date that each of the accounts in question were charged off by the original creditor. Even if the accounts have been sold to a third party since the date of charge-off, your credit reports should still reflect the original date of charge-off, as that is the date upon which the credit reporting time guidelines are based.
Third party debt collectors are not allowed to legally change the charge-off date for an account that they purchase, so the fact that your accounts have been purchased should make no difference in the length of time these accounts will appear on your credit reports. However, debt purchasers have been known to try to change dates of last payment and charge-off in an effort to keep old accounts on consumers' credit reports longer than legally allowed.
If you think that a debt purchaser is reporting an inaccurate charge-off date. You should first contact the original creditor to determine the date you last made a payment on the account. Since creditors charge-off accounts between 180 and 240 days from the date of last payment, you should be able to roughly determine
Third party debt collectors are not allowed to legally change the charge-off date for an account that they purchase, so the fact that your accounts have been purchased should make no difference in the length of time these accounts will appear on your credit reports. However, debt purchasers have been known to try to change dates of last payment and charge-off in an effort to keep old accounts on consumers' credit reports longer than legally allowed.
If you think that a debt purchaser is reporting an inaccurate charge-off date. You should first contact the original creditor to determine the date you last made a payment on the account. Since creditors charge-off accounts between 180 and 240 days from the date of last payment, you should be able to roughly determine
the charge-off date if you know when you last made a payment on the account. If a debt purchaser is reporting a charge-off date that is different from that being reported by the original creditor, you may want to dispute the credit report listing with the consumer credit reporting bureaus. The Federal Trade Commission offers a guide to disputing credit report errors.
Once you have determined the actual charge-off date, and confirmed that the account information is reporting correctly to each of the three credit bureaus, you should be able to determine when the accounts will fall of your report. The accounts should be removed automatically from your credit report seven years after the date of charge-off. As mentioned above, it is important that you verify that the information on your credit report is accurate to make sure that these negative accounts are removed from your credit reports in a timely manner.
To learn more about credit, credit reports, and credit scoring, I encourage you to visit the Bills.com credit help page.
I wish you the best of luck in resolving your credit problems, and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
Once you have determined the actual charge-off date, and confirmed that the account information is reporting correctly to each of the three credit bureaus, you should be able to determine when the accounts will fall of your report. The accounts should be removed automatically from your credit report seven years after the date of charge-off. As mentioned above, it is important that you verify that the information on your credit report is accurate to make sure that these negative accounts are removed from your credit reports in a timely manner.
To learn more about credit, credit reports, and credit scoring, I encourage you to visit the Bills.com credit help page.
I wish you the best of luck in resolving your credit problems, and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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1. Posted by Linda Hilton on Sunday 27th April 2008 13:16
The 7 year period starts with the first delinquency you had not the date of charge off. You can find this reference in the Fair Credit Reporting Act Section 605 (a)(4) and 605 (c)(1).
2. Posted by Wendy Walters on Thursday 28th August 2008 06:22
I have a "charge off" ,and I am paying a third party collections agency. Once this is paid will the charge off still be reported as such? What is the best route to take for me to get this taken off my credit report?
3. Posted by Bill on Thursday 28th August 2008 17:33
Once you pay the account in full, it will be reflected as a closed account with a zero balance and will stay on your credit profile for another 7 years. There is not much you can do to get it removed before that time unless you hire the services of a credit repair firm, but even then, if it is a valid entry, i doubt that you'll be able to remove it. If you are looking for a credit repair firm, a good firm is LexingtonLaw.com.
4. Posted by HS on Thursday 27th November 2008 14:49
If an account has been charged off but yet sold to a 3rd party and the 3rd party had paid the debt. Can the original debt still document that the account was charged off? To the best of my knowledge a charge off meaning that is was a loss for the company and they report for govt credit. can you advice on this matter
5. Posted by Bill on Monday 1st December 2008 08:10
A charge-off is both an accounting and a credit scoring term. It generally means that an account has gone delinquent and without payment for 180 days or more. On a credit report is usually shows up and an R9 account. Since you did have a chargeoff (in the past) it will likely stay there even if you payoff or settle the debt with a 3rd party collector. You could update the account and request the original creditor to remove the negative listing (request this removal of the derrogatory from the three credit bureaus and from your creditor) with your letter that the debt has been paid. I can not make any promises, but it might work.
6. Posted by Leah on Saturday 27th December 2008 13:00
If the date an acct. was opened is 2001 and the 1st date of delinquency is 2002, will the debt automatically fall off the credit report in 2008 (originally opened in 2001) or in 2009 (date of first delinquency 2002) according to the seven year rule and does a request have to be made for this deletion or does it "just come off"?
7. Posted by Walter R. on Sunday 28th December 2008 17:29
Typically, the seven year period starts from the date of last activity (whether that is the last payment or the last charge that was made). It has no correlation to the date an account was opened. Cheerio!
8. Posted by Sue on Thursday 26th March 2009 06:21
What if the debt has been "charged off" with the primary debtor but the collection agency is still trying to collect on that debt? Do I have to pay the past debt in full and can the collection agency refuse my payments?
9. Posted by Bill on Thursday 26th March 2009 10:01
An account being charged off does not mean that you do not owe the money of that the amount owed changes, it is just an accounting transaction where in the company that originated the debt, writes it off of their books of accounts. While the collection company will try to refuse anything but the full payment, they will be open to accepting a lesser amount if you negotiate with them.
10. Posted by SNP on Tuesday 12th May 2009 12:45
If an account was charged off my the original creditor in 2003 and now 6 years later, a third party collection agency is trying to settle the account, will it now be another 7 years before its removed if I pay (since its the last activity)? Currently, its not even on my credit report and I'm afraid if I pay it will be added to my report by the third party company and remain there for another 7 years. Please advise.
11. Posted by Bill on Tuesday 12th May 2009 14:20
Depending on the state that you reside in, the Statute of Limitations might have already expired on the debt. You can check for your state laws here: http://www.bills.com/collection-laws/. If you find that the debt has passed the SOL, then it might be better if you do not do anything. Please keep in mind that the SOL having expired will not stop the creditors from tring to collect on it, it just means that if they were ever to sue you in court, you would have absolute defence in that it has expired and the judge will easily dismiss the case.
12. Posted by Brandie on Wednesday 3rd June 2009 12:02
If I have chargeoffs on my credit should I pay the collection agency or the original debt holder? Also, when these accts are paid how long before they are required to update your info as being a paid acct?
13. Posted by Bill on Wednesday 3rd June 2009 13:29
You will need to pay whoever owns the account at this point. Make sure to get written offer letter that specify the payoff amount and also that the collection agency will report the debt as paid in full, before you send any payments. It usually takes 30-60 days for your credit report to be updated, but will be dependent on the collection agency being timely with their reporting process.
14. Posted by Scott on Monday 3rd August 2009 18:30
If I had a charge off of a credit account already negatively reported on my credit report can a 3rd party legally report the same bad debt negatively on my credit report as if it were a naew debt by assigning their own account number?
15. Posted by Bill on Tuesday 4th August 2009 09:00
In a word, "no." You need to dispute any such entries on your credit report. See this answer I gave to another reader that shows how: Credit Report Question and Dispute.
16. Posted by Edna on Thursday 13th August 2009 08:23
I paid Time Life $129.91 and sent in a payment for $29.99 but the said they never received it. Then I attempted to pay from my debit credit card account which had money in it at the time and they said it didn't go through but my bank disputed that and said that it was Time Life making that choice to reject the transaction. I called Time Life and told them I had mailed it and mentioned the funds being in the account. And they still refused it. This was in 2007 and now it's 2009 and I've been told that it was sent to a collection agency but they didn' t have the name of it. What can I do to get this off of my credit report?
17. Posted by Bill on Thursday 13th August 2009 09:10
Let me rephrase what you've written so I understand it. You bought something from Time Life for $129.91, and still owe the company $29.99. You tried to pay the company in 2007, but something failed during the transaction and they never got paid. Two years pass. Time Life sold the debt to a collection agent and can't tell you which collector bought it. The debt is on your credit report as unpaid and you want to remove it. Question: Have you asked Time Life if the company will accept a check for the $29.99? Have you received a letter from the collection agency? If Time Life won't deal with you, and the collection agency has not contacted you, then it is time to dispute the debt.
18. Posted by jaimeson on Sunday 6th September 2009 11:58
old debt...discharge by original creditor. 3rd party attempting to collect. 1. can they sue for the debt? 2. should i pay it if its been discharged.
19. Posted by Bill on Tuesday 8th September 2009 11:15
You could be sued by the creditor, which in your case would be the collection agency that purchased your debt from the original creditor. If a lawsuit is filed against you and you do nothing, you will have a judgment against you, which gives the collection agency the right to garnish your wages, levy your bank accounts, or seize your assets. See Collections Agencies, Collections Laws and Your State's Statute of Limitations for more information. You use the word "discharged." That term is usually used in conjunction with bankruptcy. I suspect that you really mean "written-off," which the creditor did at after 120 days of non-payment. Writing-off a debt is an accounting action and has nothing to do with the creditor's ability to collect on the debt.
20. Posted by jojo on Wednesday 9th September 2009 13:25
i have a charge off on my credit report. Acct was opened in 1994. It was charged off but on the credit report it shows no date of the charge off and no dates of activity just the date the acct was opened. I did pay this bill through a collection agency. Question is can the charge off from 1994 be removed since that is the only date showing on the report and how do i go about doing this.
21. Posted by Bill on Thursday 10th September 2009 16:29
The date the account was opened is irrelevent. What is important is the date of last activity. Dispute any entries on your credit report that are more than seven years old. See this answer I gave to another reader that shows how: Credit Report Question and Dispute.
22. Posted by trish on Thursday 15th October 2009 19:14
I have recently been contacted by a collection agency about an old debt. The date of last activity on the original debt is November 2002. I sent the agency a SOL letter, and disputed that I owed the debt due to SOL. I know that the original debt will be coming off my credit report in the next few months. Will the collection agency still be able to report on this debt if the original debt is no longer on my credit report for the next 7 years, or will this collection agency have to delete this debt from my report?
23. Posted by Denise on Saturday 17th October 2009 11:10
I have been receiving calls 3 and 4 times a day from a collection agency on a charged off department store debt that is 20 years old. I live in Texas. How can I make them stop calling me?
24. Posted by Bill on Monday 19th October 2009 08:36
Denise, under the Fair Debt Collection Practices Act (FDCPA) you have the right to send a debt collector a "Cease Communication Demand" letter. See the the Bills.com debt self-help center for a sample letter you can download and adapt for your use. See my related answers to other readers, Collections Advice and Advice on help with bills in collections for more information.
25. Posted by Bill on Monday 19th October 2009 08:49
Trish, just because the statute of limitations is reached for a debt, that does not mean the creditor cannot continue to try to collect on the debt. See the first three sections of my answer Charge Off, Credit Report, Statute of Limitations & Merged Creditors for more information on this nuance in the law. You can send the collection agent a "Cease Communication Demand" letter, a sample of which you can find at the Bills.com debt self-help center. Under the Fair Debt Collection Practices Act (FDCPA) the collection agent must discontinue calling you upon receipt of such a letter.