Clean-Up Charged Off Debt Accounts
I have a lot of old debt and charge offs. What is the best way to clear these up?
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?
Most debt will be removed from your credit reports 7 years after the date of first delinquency. Here are the steps to take to deal with old and charged off debt accounts.
The term charge-off is an accounting term used by creditors. It means an account is transferred from the "accounts receivable" books to the "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 defaulted accounts. For the consumer, the only consequence of an account charging off is the account will report as a negative item on the consumers’ credit reports.
Credit Report Rules at a Glance
Federal law (US Code Title 15, §1681c) controls the behavior of consumer credit reporting agencies. 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 may be reported 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. Learn the lifespan of a judgment in your state at the Bills.com Statute of Limitations Laws by State page.
The start of the 7-year period begins at the date of first delinquency, or if no payments are made, when the first payment was due. Review your credit report carefully to make certain the dates of first delinquency are reported correctly. Unscrupulous collection agents reset the date of first delinquency to stretch out how long a derogatory appears on consumer’s credit report. This is illegal under the FCRA.
Just because a debt does not appear on a credit report does not mean the statute of limitations for the debt has passed. The opposite is also true: The passing of a state statute of limitations on a debt does not mean the debt may not appear on a credit report. The federal FCRA and state statutes of limitations are separate and independent of each other.
Whether a debt appears on a credit report does not establish legal liability for the debt. The opposite is also true: You may have legal liability for a debt not reported to the credit reporting agencies. Credit reports are not legal records of every debt you owe.
If you struggle with credit card debt, then get a no-cost consultation with a Bills.com pre-screened debt provider.
Get No-Cost Copies of Your Credit Reports
The best way to determine the date of first delinquency is to get copies of your credit reports from each of the three consumer credit reporting agencies — Equifax, Experian, and TransUnion — through AnnualCreditReport.com. Your credit reports should list the date each of the accounts in question were charged off by the original creditor. Even if the accounts are sold to collection agents, your credit reports should still reflect the original date of first delinquency, which starts the 7-year clock.
Debt collectors are not allowed to change the date of first delinquency on accounts they purchase. Whether collection agents buy or sell your accounts, the date of first delinquency may not change. Unscrupulous debt collectors change dates of first delinquency in an effort to keep old accounts on consumers’ credit reports longer than 7½ years.
If a collection agent misreports the date of first delinquency, contact the original creditor to learn the date you last made a payment on the account. If a debt collector reports a date of first delinquency different from that being reported by the original creditor, dispute the credit report listing with the consumer credit reporting agencies.
|More About Collection Agents|
|• Midland Credit Management • MRS Associates • Northstar Location Services • Portfolio Recovery Associates • Zwicker & Associates|
|Always validate a debt.|
Once you find the date of first delinquency, and confirm the account information is reported 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 7 to 7½ years after the date of date of first delinquency. As mentioned above, verify the information on your credit report to make sure negative information is removed from your credit reports in a timely manner.
Dealing with old and charged off debt accounts is a chore, but should be much easier now that you know what steps to take. To learn more about credit, credit reports, and credit scoring, visit the Bills.com credit help page.
I hope this information helps you Find. Learn & Save.
In any event, the derogatory mark on a credit score is leverage the collection agent can use against the consumer.
The time to dispute a derogatory is after the account is settled when the collection agent doesn't care about it anymore.
Consult with a Florida lawyer regarding the Ford class action, and if it has any bearing on your present case.
Under th FDCPA, a collection agent must report accurate information on a consumer's credit report. It may not threaten to report false information in the process of collection. If the collection agent is reporting an inaccurate DOFD, then it violates the FDCPA.
Under the FCRA, the consumer credit reporting agencies — Equifax, Experian, and TransUnion — are required to correct or delete any information that is inaccurate, incomplete or that cannot be verified. You have the right, under the FCRA, to dispute any incorrect information on your credit report.
If the CRAs do not correct the information on your credit reports, then consult with a lawyer who has experience with FCRA and FDCPA violations. You may wish to file a lawsuit against the collection agent who reports the false information, and the CRAs that publish the incorrect information.