Chap 13 and the seven year time clock

[jmranchman]

I filed for bankruptcy in Nov of 2003 and it was dismissed in May of 2004....does that mean the seven year clock on the debts included restarted at that point?

[Ahntara]

Debts (the accounts themselves) included in BK may appear in the body of your CR for 7 years plus 180 days from the 'beginning of the commencement of the delinquency', per the FCRA 1681c, Subsection 605.

The filing/discharge of the legal action of BK may appear for 10 years in the Public Record section of your CR. However, it's customary for Ch 13 listings to get suppressed after 7 years.

[jq26]

I'm curious as to this answer as well. Its clear that the reporting of the BK is a totally different period than the "delinquency date + 7yr" reporting of the tradelines on credit reports.

I guess it boils down to whether the payments under the 13 plan took the debts out of the definition of "delinquency" for FCRA purposes. If so, then the clock would reset upon dismissal. If not, then the original delinquency date would hold. I don't know the answer and will defer to Ahntara or another poster to clarify.

[Ahntara]

Couldn't be any clearer...

From the FCRA 1681c, Subsection 605(a) "Information excluded from consumer reports...(1) CASES...under the Bankruptcy Act that, from date of entry...or the date of adjudication...antedate the report by more than 10 years...(4) ACCOUNTS placed for collection or charged to profit and loss which antedate the report by more than seven years..." {emphasis mine}

Further on the statute gives the formula for the starting point of RP. From 1681c, Subsection 605© "Running of Reporting Period...The 7-year period...shall begin...upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection...".

The absolute starting point is the 'beginning of the commencement of the delinquency". Nothing legally changes that date. Notice that nothing else is listed in the law, not BK discharge, not subsequent PIF or parital payments, not the creditors discretion. RP for accounts begins at a finite point and ends 7 years plus 180 days later. Other conditions are omitted because they do not apply. The plain language of the statute stands. When in doubt, read the law!

[jq26]

The OP is asking about BK dismissal not discharge. Just to be sure you caught that. So if his account was current and not written off for profit or loss nor placed for collection when entering BK and payments continued as part of most 13 plans, then when would the date of 1st delinquency be? I suppose the date of filing would be a good place to sdtart, but if 13 plan payments were high enough to cover minimum payments, then aside from the ipso facto clause there is no delinquency.

[jmranchman]

Thanks for all of your replies....

jq you get what I am saying I believe. SInce you are technically "paying" on these debts thru bankruptcy, wouldnt a dismissal (not discharge) mean that the clock would start over since these payments were going toward the OC but not any more?

[jq26]

Possibly, but I'm not sure. Logically and by the language of the statute, it seems so. Many people are seriously delinquent when they enter BK, so the hypothetical that I threw out there above is probably the small minority.

And creditors are quite stupid. My guess is they'll use the date of delinquency (if there is one), and if not they'll use the date of filing, even if you didn't finish. And that would be my argument if disputing.

Or maybe they won't buy it and you'll take 'em to court, and then settle the issue once and for all with some meaningful case law.

[Ahntara]

"...BK dismissal not discharge..."

I ignored that because Dismissal is the typical disposition for a CH 13. So, for clarity here...

jmranchman: Was the BK completed and dismissed due to completion? Or was the BK case dismissed, as in you're no longer bankrupt? Was this account in default before, during or after your BK action?

Once an account defaults, either through non-payment or because the creditor declares it, (which is typical once notified of BK), the DOFD is established. Subsequent payments after default can't impact Reporting Period. Effects on SOL would also be mitigated by federal BK law. Either way, you're safe using DOFD on any TL and also quite safe expecting the CRA's to do the same.

[jmranchman]

Thanks for the reply Ahntara......I filed for bankruptcy mainly because I couldnt afford my mortgage any longer due to a lay off....I had several credit cards I had been paying off (mostly old college mistakes) but I wasnt concerned about them at the time, more concerned about not being kicked out on the side of the street. Anyway, I filed in Nov of 2003 and was paying around 200 a month. I got to the point that I couldnt even afford this and I missed two payments, so they dismissed it. I gave it about 4 years and now I am working on getting as much of this fixed as I can.

ALL of my debts are prior to 2000 so they are outside of SOL. I was hoping upon hope that when I filed in 2003 that it didnt reset that clock. Thanks for the advice Ahntare....I do appreicate it