Jump to content

Will resuming payments change the 7 year SOL on Credit Report?


Recommended Posts

The last time I made payments on a particular debt was Summer 2002. That is also the first date of delinquency with the original creditor. If I resume payments with a collection office on this debt, will that change the 7 year period for this debt to disappear from my credit report. Or will payment history for the original creditor and the collector disappear in 2009?

I do know that resuming payments will restart the SOL for the collector to sue me legally? However, I plan to pay off the debt under a settlement agreement, so I'm hoping it won't come to that.

Link to comment
Share on other sites

The date of first delinquency doesn't change, and that's what the reporting period is based on.

As for the SOL for lawsuit, depends on the manner of the agreement and your state laws.

Hi Direred!! Just to make sure I understand. You're saying that even if I resume payments on the account in 2007, if the first day of delinquency was 2002, the history from the original creditor and collector for this account, will be removed from my credit report in 2009?

Link to comment
Share on other sites

That is true. I would make sure to DV them before paying a dime though. Also check your state's SOL and remember that ANY payment may reset that SOL.

Also, if you sign a new payment agreement with the CA, this is considered an A&S. This is an all new contract that replaces the old one. Depending on how it is worded, this can be tricky.

Link to comment
Share on other sites

Hi Direred!! Just to make sure I understand. You're saying that even if I resume payments on the account in 2007, if the first day of delinquency was 2002, the history from the original creditor and collector for this account, will be removed from my credit report in 2009?

Exactly.

Unless you sign a new agreement voluntarily re-aging the debt. Simple resumption of payments doesn't change the DOFD.

Link to comment
Share on other sites

Exactly.

Unless you sign a new agreement voluntarily re-aging the debt. Simple resumption of payments doesn't change the DOFD.

Hey again Direred!! The collection office said there isn't anything for me to sign. They sent me a letter with the details I requested, and asked when I'd like to make my payments each month, and that was it. I was expecting to receive monthly statements, but I've been told collection offices rarely do that. The letter states when my payments will begin, the date of my last payment 12 years from now, and that a 1099 form will not be submitted as long as I'm making monthly payments. According to the collector, 1099 forms are only submitted when someone makes a lump sum settlement payment where they are saving over $600. Howeer, a 1099 is not required for monthly payments.

Link to comment
Share on other sites

If you put together the advice from direred and divemedic, is this accurate:

If confuseddebtor starts paying in 2007, then:

1. The TL will drop off the credit report in 2009.

2. After the SOL expires, the creditor can't sue confuseddebtor for nonpayment of the original debt.

Now *assume* that the SOL expires in 2010. What happens if confuseddebtor starts defaulting on the repayment agreement in 2011? (I'm just asking hypothetically, confuseddebtor, I'm not implying that you will default!)

Link to comment
Share on other sites

"...If confuseddebtor starts paying in 2007...TL will drop off...in 2009..."

Reporting Time Period has no relation to payments (after default, that is). RTP begins according to the formula in the FCRA. {1681c Section 605} Nothing legally changes this date. Payments (and sometimes making payment arrangements) can change SOL, not RTP.

"...After SOL...creditor can't sue..."

Time-barred debts can still be litigated. The consumer would need to raise SOL as an affirmative defense.

Link to comment
Share on other sites

Be very careful about this. A 12 year payment plan from a CA is extremely out of the ordinary. They are probably illegally tacking on interest or fees. CAs are not known for their good record keeping so it is also not unheard of for them to keep taking money from you long after you have finished paying off what you owed.

Hey again Direred!! The collection office said there isn't anything for me to sign. They sent me a letter with the details I requested, and asked when I'd like to make my payments each month, and that was it. I was expecting to receive monthly statements, but I've been told collection offices rarely do that. The letter states when my payments will begin, the date of my last payment 12 years from now, and that a 1099 form will not be submitted as long as I'm making monthly payments. According to the collector, 1099 forms are only submitted when someone makes a lump sum settlement payment where they are saving over $600. Howeer, a 1099 is not required for monthly payments.
Link to comment
Share on other sites

If you put together the advice from direred and divemedic, is this accurate:

If confuseddebtor starts paying in 2007, then:

1. The TL will drop off the credit report in 2009.

2. After the SOL expires, the creditor can't sue confuseddebtor for nonpayment of the original debt.

Now *assume* that the SOL expires in 2010. What happens if confuseddebtor starts defaulting on the repayment agreement in 2011? (I'm just asking hypothetically, confuseddebtor, I'm not implying that you will default!)

Hey everyone! This is true. I checked on the above, and resuming payments will not change the seven year reporting period on credit reports. However, it can restart the clock for collectors or creditors to sue in court for a judgement. In my case, the SOL left on this debt is six years. My written agreement states that as long as I'm making payments further collection activities won't take place. So again, if the agreement is legitimate, that's a good thing. Hopefully I'll pay it off before then. :)

Link to comment
Share on other sites

Hey everyone! This is true. I checked on the above, and resuming payments will not change the seven year reporting period on credit reports.

Not entirely true.

If the account is still owned by the original creditor, they are allowed under federal regulations to return the account to current status after 3 consecutive minimum payments have been made by the consumer under a workout plan. This is called "re-aging," and they can do it twice in a five year period on an account at their discretion. If they re-age the account the account will be considered active and will NOT drop off 7 years after the delinquency.

If the account has been sold along with all rights to another party by the OC, then entering into a payment plan with the 3rd party will not affect the 7 year time limit on reporting the tradeline.

Link to comment
Share on other sites

Also please note as stated by another poster above (or below, depending on how you view your threads) -- I mis-stated the SOL issue. Anyone can sue you at anytime for anything. Whether they win or not is another question. If sued, you may win if you have a good defense. The fact that a SOL has run its course may be a good defense to a lawsuit.

Link to comment
Share on other sites

If the account is still owned by the original creditor, they are allowed under federal regulations to return the account to current status after 3 consecutive minimum payments have been made by the consumer under a workout plan. This is called "re-aging," and they can do it twice in a five year period on an account at their discretion. If they re-age the account the account will be considered active and will NOT drop off 7 years after the delinquency.

True, but the negative portion of the TL would have to come off, thus leaving a positive TL.

Also, if you are paying on the debt, the SOL would be reset in many states, thus allowing them to sue you for years to come, should you stop paying again.

Link to comment
Share on other sites

Not entirely true.

If the account is still owned by the original creditor, they are allowed under federal regulations to return the account to current status after 3 consecutive minimum payments have been made by the consumer under a workout plan. This is called "re-aging," and they can do it twice in a five year period on an account at their discretion. If they re-age the account the account will be considered active and will NOT drop off 7 years after the delinquency.

If the account has been sold along with all rights to another party by the OC, then entering into a payment plan with the 3rd party will not affect the 7 year time limit on reporting the tradeline.

I responded to this in another thread, but I'll post here as well. A collector tried to re-age accounts belonging to my brother in law two years ago, and my room mate in 2000, along with adding the extra 7 years. So I know for a fact collectors may try this, but they aren't legally allowed and it won't stand up in court. Both agencies were fined, and lost in court. I think an OC tried this with my brother in law also, but I didn't follow up on it. I left a message for him, but he's out of town for the holiday. I'm looking forward to hearing how it turned out. I'm assuming the OC didn't have that authority either, otherwise, I'm sure he would have called ragging about it. lol

This is from the Experian credit report website.....

Can a Collection Agency Re-Age My Debts?

Legally, no. Re-aging debts is the process by which a collection agency reports the debt as becoming delinquent on the date it was referred to the collection agency in an effort to extend the time during which the debt can be reported on a consumer’s credit report. This practice violates not only the Fair Debt Collection Practices Act (FDCPA), but also the Fair Credit Reporting Act (FCRA).

The FCRA states that a debt can be reported for 7 years from the date of the original delinquency. Altering the date of the original delinquency violates the portion of the FCRA which states that a furnisher of information must report the first date of delinquency, or be subject to fines in the amount of $2,500 per violation. This also violates the FDCPA’s prohibition against making false or misleading representations in connection with the collection of a debt.

So What Do You Do If Your Debt is Re-Aged?

If you see a re-aged account appear on your credit report, the worst thing you can do is make an arrangement to pay it as that can start the clock running again – both on how long the debt can be reported, and on whether or not you can be sued on the debt.

Your first step is to write to the credit bureau to dispute the tradeline and request that it be deleted from your report. You’ll need to provide specific information about why the debt shouldn’t be reported, including the original creditor and the original date of delinquency. If you have any supporting documentation which shows the original date of delinquency, you should forward that to the credit bureau as well.

At the same time, you should notify the collection agency, in writing, that the debt is disputed and request that the collection agency provide you with the underlying documentation which supports the debt, and which shows the original date of delinquency. If you can’t get the credit bureau to delete the item from your report, then you may need to contact your state’s Attorney General’s Office and/or the Better Business Bureau for assistance. You may also want to consider consulting an attorney to determine whether you have grounds to sue the collection agency for its violation of federal laws.

http://credit.about.com/od/fastfactsfaqs/f/reaging.htm

Link to comment
Share on other sites

You are mistaken here, remember that once you agree to make payments on the debt, and do so, the debt is no longer delinquent. Since it is now up to date, the TL can be reported without regard to the 7 year period, except that negative remarks may only last 7 years.

For clarification, read the Kosmerl letter.

Click here

Link to comment
Share on other sites

You are mistaken here, remember that once you agree to make payments on the debt, and do so, the debt is no longer delinquent. Since it is now up to date, the TL can be reported without regard to the 7 year period, except that negative remarks may only last 7 years.

For clarification, read the Kosmerl letter.

Click here

Nope. Sorry gotta disagree with ya on that one. I've known too many people personally who have been in this situation. Also, the letter you posted is from 1999...this is 2007(in a few days). I think I'll stick with the updated information provided from the credit bureaus, lawyers who handled the cases of a few people I know, and other state laws. The law I posted was from the Experian website, not my words.

When I'm not sure of something, I will usually go back and forth, but I'm content with my understanding concerning this in regards to collectors. So this will be my last message on the matter. Concerning ORIGINAL CREDITORS, I'm still waiting to hear from my brother in law who went to court about this very thing. Had the creditor extended everything 7 years, trust me, he would have called to b*#@$tch about it. lol

Link to comment
Share on other sites

So you are saying that if I make a late payment, 7 years later my TL gets deleted, regardless of if I have paid the account up to date or not? Think about that. That would mean that if I make several late payments in year 2 of my 30 year mortgage, the TL for it it deletes at year 9. It doesn't work like that. Read the case law AND the statute.

Simply reaging an account cannot be done, and a negative account charged off MUST come off in seven years. Where it gets tricky is if the account has been brought current. Once the account is having regular payments made, the account is no longer delinquent.

If you read the statute, the 7 year period ONLY applies to items that are charged off or delinquent. Since you are making regular payments, the TL has not been charged off, is no longer delinquent, and is thus not subject to the 7 year 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.
Link to comment
Share on other sites

Apples and oranges.

"...Once the account is having regular payments made, the account is no longer delinquent..."

The underlying issue is default. Once an account goes into default, the DOFD is set, so is Reporting Time Period (7 years from that date). Nothing legally changes that. If an account was simply delinquent, then brought current, the account remains, with derogatory data 'falling off' at 7 years.

Methuss spoke about federal regulations to "return the debt to it's original status" = non-default. A CA cannot change the status, only the OC can. Changing the status back to an account in good standing (even if it happens to have late payments) is beneficial to the consumer. Changing the status of a defaulted account may change it's reporting.

The quoted material from Experian specifically relates to the reporting of defaulted accounts. If the hypothetical account in question is no longer in default, the 7 year drop off rule longer applies only to derogatory data in the TL, not to the TL itself.

Link to comment
Share on other sites

Exactly, the TL would remain, but the derog notation would drop off. Methuss said:

If the account is still owned by the original creditor, they are allowed under federal regulations to return the account to current status after 3 consecutive minimum payments have been made by the consumer under a workout plan. This is called "re-aging," and they can do it twice in a five year period on an account at their discretion. If they re-age the account the account will be considered active and will NOT drop off 7 years after the delinquency.

and the OP disagreed. I was simply agreeing with Methuss.

Link to comment
Share on other sites

This is an interesting thread. I was previously under the impression that debtors were precluded from re-aging once the account has been c/o. I re-read the June 12, 2000 FFIEC guidelines and didn't see anything specifically preventing a creditor from re-aging a c/o acct, but the OC would have to pay taxes to the IRS to re-age the account. That's alot to ask of an OC.

I'd be curious to know if any smooth talkers have ever been able to accomplish this? Anyone? Bueller? Anyone?

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
 Share

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.. For more information, please see our Privacy Policy and Terms of Use.