Re: charge-off

Posted by Srserpicol (198.81.16.167) on May 30, 2002 at 00:52:17:

In Reply to: Re: charge-off posted by Bob on May 29, 2002 at 18:44:42:

Bob, I found this piece from another web site that you may find of interest. I think it answers all you question concerning the "7 year time clock" for reporting old debts..hopes it helps..

>>>>>There are many misconceptions about debts charged off prior to 1996 and is probably one of the most common questions we get. Charged off debts and how long can they remain on your credit reports. You have to remember, the old FCRA was very ambiguous which means, even though it was not specific for saying exactly when a date commenced, it has never been legal nor acceptable to charge a debt off and then report it for another additional 7 years simply because a payment was made.

Creditors and CRA were doing this because like many others, they really did not understand the ambiguity of the FCRA. However, as soon as a consumer brought it to their attention that they were reporting the debt past the 7-year rule, they (Creditor or CRA) should have complied and removed the account.

Repaying a debt cannot restart the clock on reporting whether it was charged off prior to 1996 or after. Even the original FCRA did not allow for that. The last activity at that time, meant date charged off, last paid, or closed but did not and never has allowed a creditor to use the DOLA as a new "Commencement of Delinquency."

It has happened to many people but can be argued very effectively as even pointed out by the attorney at the FTC who says: "If an account was reported as a charge off before the date (1997), the Commission's view has been that it can be reported for seven years from the date the creditor actually charged it off."

That is very specific and legally you can always fight this if it happens to you. One letter to a CRA or creditor with a copy of the FTC opinion and it should be removed.

Here is the Q&A from FTC:

Question: Is the reporting period extended if (A) the original creditor sells or transfers the account to another creditor, (B) the consumer responds to post-charge off 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?

Answer: 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 charge offs -- 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 charge offs

Question: Since Sections 623(a)(5) and 605(c)(1) provide new rules for calculating the 7-year period that became effective in 1997, do charge off accounts now have different obsolescence periods depending on when the charge off occurred?

Answer: Yes. Section 605(c)(2) states that the section "shall apply only to items of information added to the (CRA) file of a consumer on or after" 455 days after enactment, or December 29, 1997. Therefore, a charge off reported to a CRA on or after that date is subject to the new commencement-of-the-delinquency method of calculating the obsolescence period set forth in Sections 623(a)(5) and 605(c)(1). On the other hand, a charge off reported to a CRA before December 29, 1997, is not covered by the new provisions.

But if a credit account was reported as a charge off before that date, the Commission's view has been that it can be reported for seven years from the date the creditor actually charged it off.

So, in closing, the point is, yes it happens but is it legal? No. Can it be fought & removed if it does happen? Yes. Do creditors really go by the before & after dates anyway? NO! Most of them don't even understand it and merely follow the current revised FCRA, after all most would have to be an attorney to even figure this out. Need more proof? here is the letter from the FTC's attorney about this similar issue.<<<<<

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