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Voluntary Repossession And Your Credit Report

I have a voluntary repossession. How long will that stay on my credit report, and why?

I just paid off a tool, which was voluntary repossessed. How long does it take to get off my credit report, and why?

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Bill's Answer
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The derogatory will appear on your credit report for 7 years from date of first delinquency. It may appear longer if the lender obtained a judgment against you. You did not mention a judgment, but that is possible.

Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies (CRAs). The specific law is called the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer’s credit report for up to 7½ years. To determine when an account will be removed by the CRAs (TransUnion, Equifax, and Experian and others), add 7 years to the date of first delinquency. The date of first delinquency is shown in credit reports. Subsequent activity, such as resolving the debt or one debt collector selling the debt to another collector, is irrelevant to the 7-year rule.

Some debts have a reporting period longer than 7 years, including:

  • Tax liens: 10 years if unpaid, or 7 years from the payment date
  • Bankruptcy: 10 years from the date of filing (15 U.S.C. §1681c)
  • Perkins student loans: Until paid in full (20 U.S.C. §1087cc(c)(3))
  • Direct and FFEL loans: 7 years from default or rehabilitation date (20 U.S.C. §1080a(f)(1) and 20 U.S.C. §1087e(a)(1))
  • Judgments: 7 years or the debtor’s state statute of limitations on judgments, whichever is longer

The FCRA 7-year rule is separate from state statutes of limitations for debt issues.

Just because a debt is removed from a credit report does not mean the statute of limitations for receiving a judgment to collect the debt has passed. Review your credit report carefully to make sure that the dates of last payment being reported on these accounts are correct.

The law stating that derogatory items must be removed from credit reports after seven years is designed to help consumers recover from past credit mistakes and help them rebuild their credit rating. If you find charged-off accounts appearing on your credit report after seven years, you may want to dispute the incorrect listings with the credit bureaus.

Some creditors, especially debt purchasing firms, will report inaccurate charge-off dates to extend the amount of time an old account appears on your credit report. If you find any inaccurate information, you should dispute the credit report listing with the bureau in question. See the Federal Trade Commission document FTC Facts for Consumers: How to Dispute Credit Report Errors for more information.

The 7-year rule only applies to derogatory items, not to accounts that you are keeping current, or which you closed in good standing. As long as an account is not considered derogatory, it can remain on your credit report indefinitely. In fact, even accounts that are no longer reporting to the credit bureaus may continue to appear on your report as long as the account is not a derogatory item. It is common to see positive items that are more than 20 years old appearing on a credit report.

Check your credit report to see if the voluntary repossession account is listed. I am not familiar with tools being listed on a credit report, yet it is possible that it can be reported.

I encourage you to visit our Credit Help Information & Resources section to learn more about credit.

I hope this information helps you Find, Save, and Learn.



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