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panic unit

Help! Trade line was previously CH 7 Bankruptcy (in error), and is now simultaneously Current + Charged Off!

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My credit reports are great, except for one pesky TL that just seems to be getting more awkward every time I convince the creditor to change it.

It all starts back in Mar 2017:  Credit card company closes my account, charging off the $9200 balance. 
I had stopped using that card years earlier, but was making auto-payments up until closure.  I didn't watch my bank statements carefully until now, so I had incorrectly assumed all this time that the account was still open, and that payments were still being made.  The reason for the closure -- get this -- is because someone with the same first/last name (but different SSN, acct number, acct balance, and home address) filed for bankruptcy around that time. When their CC account was discharged, the creditor applied this discharge to my account, in some sort of fit of gross negligence. 

About a month ago, I start the pre-approval process for a mortgage (first-time buyer).  Loan officer tells me I won't qualify for a conventional loan, most likely due to TU reporting some account as bankrupt. 
"Do you recall ever filing for bankruptcy?"  

I start going through bank statements, and finally realize that the last auto-payment for that CC account was made in Mar 2017.  I log in to the CC's website and just see a message that my account is no longer accessible, and to call an 800 number.  I obtain my credit report, for the first time in 5 years.  Here's what they show for that TL:

  • TU (updated 03/05/2017)
    - Balance: [blank] 
    - Pay Status: Current Account
    - Remarks: CHAPTER 7 BANKRUPTCY 
    - (no payment history info)
  • EF (updated 03/05/2017)
    - Reported Balance: $0
    - Account Status: UNAVAILABLE 
    - Charge Off Amount: [blank]
    - Payment history: Shows either "paid-on-time" or blank for 2011 thru 2017
    - Comments: [blank]
  • XP: (No missing/adverse info)

I start pulling bankruptcy court records, and discover pretty quickly what happened.  I decide that rather than go through the CRAs' dispute channels, I had sufficient documentation to take this up directly with the creditor.  I call their 800 number, present my claim & findings, and they admit that the bankruptcy was reported in error.  They send me a letter stating as such, and also fax it to my loan officer so that she can order a "re-score" for my pre-approval. I qualify for the conventional loan, at a reasonable interest rate.  I relax, expecting that my credit report will look much better next month...

About two weeks later, I start getting "negative account info" alerts from a credit monitoring service.
I didn't obtain the credit reports again, but in the alert summary I see the following for that CC's TL:

  • TU (updated 09/11/2017): 
    - Pay Status changed to "CHARGED OFF AS BAD DEBT"
  • EF (updated 09/11/2017): 
    - Account Status changed to "CHARGE-OFF (9)"
    - Balance changed from $0 to $9200

I'm furious, but calm.  I call the 800 number again, telling them that their mistake is still screwing up my credit report.  Rep agrees that the account shouldn't have been charged off, but says it cannot be reversed.  She also said that they can't ask me to repay the balance.  My position is that because the charge-off was done by mistake, their reporting of it is also a mistake, which they can & should rectify.  They said they will have to investigate whether their report is actually an error, it will take up to 60 days, etc.  I mentioned that the closing date for my new home will have arrived and passed long before then, so we got a manager involved, who promised to do an "urgent investigation" and that I can follow-up in five days...

On the fifth day, I receive more credit monitoring alerts, this time indicating "improvements".
I pull the credit reports, and see the following:

  • TU (updated 09/17/2017):
    - Pay Status changed back to "Current Account"
    - Balance changed from [blank] to $9200 
    - Remark changed to "CLOSED BY CREDIT GRANTOR"
    - Payment history added:  Shows "OK" for Mar 2017, "N/R" for Apr 2017 thru Aug 2018, and "C/O" for Sep 2018 thru Aug 2020
  • EF (updated 09/17/2017):
    - Account Status changed to "PAYS_AS_AGREED"
    - Balance is still $9200
    - Charge Off Amount is still blank
    - Payment history: Now shows "CO" for the same date-range as the TU report
    - Comment changed to "Account closed by credit grantor"

At this point, I'm not sure what to do.  It looks like the CC's latest report fixed the account status, but I may be stuck with the "CO" marks in my payment history.  The loan officer says my mortgage is already being underwritten, and that these credit changes shouldn't affect the terms.  But my credit score is taking a 70-80 point hit, and I am not pleased. 

Whew! Here's the questions I currently have:

  1. My dispute is with the payment history -- "charged off" is technically correct, but they took this action as a result of their mistake, not mine.  Should I formally dispute this with TU & EF?  If so, what should the "CO" marks be changed to?  Can I request that the payment history be changed back to blank/NR, or simply deleted outright?   
  2. It looks like there may have been at least a 1-year gap, between the account being closed, and being charged off (I'm guessing this was to allow time for the bankruptcy being potentially dismissed). Is there a good chance that the charge-off could have been avoided, had I realized early enough what was happening to my account?
  3. What is the real status for this account - Current, or Charged Off?  Is it even possible to be both simultaneously, or has this TL been turned into total nonsense?   
  4. What about voluntary repayment?  Is there any benefit (other than my pride/honor) in doing so, or additional consequences if I don't?  
  5. Could I offer repayment as a bargaining tool?  I'm familiar with the pay-to-delete deal for collection accounts, but is it even possible to delete the TL for a revolving account?

I'll probably just end up talking to a credit counseling/repair service in the coming months, once my monthly budget has re-stabilized.  But in the meantime, I would greatly appreciate any answers or additional thoughts that you might have.

Thanks for reading!

 

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On 9/24/2020 at 12:16 AM, panic unit said:
 

My credit reports are great, except for one pesky TL that just seems to be getting more awkward every time I convince the creditor to change it.

It all starts back in Mar 2017:  Credit card company closes my account, charging off the $9200 balance. 
I had stopped using that card years earlier, but was making auto-payments up until closure.  I didn't watch my bank statements carefully until now, so I had incorrectly assumed all this time that the account was still open, and that payments were still being made.  The reason for the closure -- get this -- is because someone with the same first/last name (but different SSN, acct number, acct balance, and home address) filed for bankruptcy around that time. When their CC account was discharged, the creditor applied this discharge to my account, in some sort of fit of gross negligence. 

About a month ago, I start the pre-approval process for a mortgage (first-time buyer).  Loan officer tells me I won't qualify for a conventional loan, most likely due to TU reporting some account as bankrupt. 
"Do you recall ever filing for bankruptcy?"  

I start going through bank statements, and finally realize that the last auto-payment for that CC account was made in Mar 2017.  I log in to the CC's website and just see a message that my account is no longer accessible, and to call an 800 number.  I obtain my credit report, for the first time in 5 years.  Here's what they show for that TL:

  • TU (updated 03/05/2017)
    - Balance: [blank] 
    - Pay Status: Current Account
    - Remarks: CHAPTER 7 BANKRUPTCY 
    - (no payment history info)
  • EF (updated 03/05/2017)
    - Reported Balance: $0
    - Account Status: UNAVAILABLE 
    - Charge Off Amount: [blank]
    - Payment history: Shows either "paid-on-time" or blank for 2011 thru 2017
    - Comments: [blank]
  • XP: (No missing/adverse info)

I start pulling bankruptcy court records, and discover pretty quickly what happened.  I decide that rather than go through the CRAs' dispute channels, I had sufficient documentation to take this up directly with the creditor.  I call their 800 number, present my claim & findings, and they admit that the bankruptcy was reported in error.  They send me a letter stating as such, and also fax it to my loan officer so that she can order a "re-score" for my pre-approval. I qualify for the conventional loan, at a reasonable interest rate.  I relax, expecting that my credit report will look much better next month...

About two weeks later, I start getting "negative account info" alerts from a credit monitoring service.
I didn't obtain the credit reports again, but in the alert summary I see the following for that CC's TL:

  • TU (updated 09/11/2017): 
    - Pay Status changed to "CHARGED OFF AS BAD DEBT"
  • EF (updated 09/11/2017): 
    - Account Status changed to "CHARGE-OFF (9)"
    - Balance changed from $0 to $9200

I'm furious, but calm.  I call the 800 number again, telling them that their mistake is still screwing up my credit report.  Rep agrees that the account shouldn't have been charged off, but says it cannot be reversed.  She also said that they can't ask me to repay the balance.  My position is that because the charge-off was done by mistake, their reporting of it is also a mistake, which they can & should rectify.  They said they will have to investigate whether their report is actually an error, it will take up to 60 days, etc.  I mentioned that the closing date for my new home will have arrived and passed long before then, so we got a manager involved, who promised to do an "urgent investigation" and that I can follow-up in five days...

On the fifth day, I receive more credit monitoring alerts, this time indicating "improvements".
I pull the credit reports, and see the following:

  • TU (updated 09/17/2017):
    - Pay Status changed back to "Current Account"
    - Balance changed from [blank] to $9200 
    - Remark changed to "CLOSED BY CREDIT GRANTOR"
    - Payment history added:  Shows "OK" for Mar 2017, "N/R" for Apr 2017 thru Aug 2018, and "C/O" for Sep 2018 thru Aug 2020
  • EF (updated 09/17/2017):
    - Account Status changed to "PAYS_AS_AGREED"
    - Balance is still $9200
    - Charge Off Amount is still blank
    - Payment history: Now shows "CO" for the same date-range as the TU report
    - Comment changed to "Account closed by credit grantor"

At this point, I'm not sure what to do.  It looks like the CC's latest report fixed the account status, but I may be stuck with the "CO" marks in my payment history.  The loan officer says my mortgage is already being underwritten, and that these credit changes shouldn't affect the terms.  But my credit score is taking a 70-80 point hit, and I am not pleased. 

Whew! Here's the questions I currently have:

  1. My dispute is with the payment history -- "charged off" is technically correct, but they took this action as a result of their mistake, not mine.  Should I formally dispute this with TU & EF?  If so, what should the "CO" marks be changed to?  Can I request that the payment history be changed back to blank/NR, or simply deleted outright?   
  2. It looks like there may have been at least a 1-year gap, between the account being closed, and being charged off (I'm guessing this was to allow time for the bankruptcy being potentially dismissed). Is there a good chance that the charge-off could have been avoided, had I realized early enough what was happening to my account?
  3. What is the real status for this account - Current, or Charged Off?  Is it even possible to be both simultaneously, or has this TL been turned into total nonsense?   
  4. What about voluntary repayment?  Is there any benefit (other than my pride/honor) in doing so, or additional consequences if I don't?  
  5. Could I offer repayment as a bargaining tool?  I'm familiar with the pay-to-delete deal for collection accounts, but is it even possible to delete the TL for a revolving account?

I'll probably just end up talking to a credit counseling/repair service in the coming months, once my monthly budget has re-stabilized.  But in the meantime, I would greatly appreciate any answers or additional thoughts that you might have.

Thanks for reading!

 

You should call an attorney that handles FCRA claims. To folks like you and I, consumers, no it should not report current on one report and charge off on another.  However, it definitely wasn't current. It was chapter 7, payments stopped being made, etc. Albeit their fault, it still happened that way. None of this changes the fact of whether or not you owed the debt, however. If you owe the debt you owe the debt. Whether or not you will ever pay it is something different entirely. Yes there are consequences if you don't repay your outstanding debt, which include what it would be for anyone else including collections on your credit reports and/or possibly being sued for the debt. Just by what you divulge here the status of the account is not current, and likely is charged off. An FCRA attorney may be able to tell you quickly and free if you might have a case against the creditor, or the credit bureaus. §1681e(b) I think would be an issue for one or either of them, the bureaus and the creditor.

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10 minutes ago, alwayswinning36 said:

You should call an attorney that handles FCRA claims. To folks like you and I, consumers, no it should not report current on one report and charge off on another.  However, it definitely wasn't current. It was chapter 7, payments stopped being made, etc. Albeit their fault, it still happened that way. None of this changes the fact of whether or not you owed the debt, however. If you owe the debt you owe the debt. Whether or not you will ever pay it is something different entirely. Yes there are consequences if you don't repay your outstanding debt, which include what it would be for anyone else including collections on your credit reports and/or possibly being sued for the debt. Just by what you divulge here the status of the account is not current, and likely is charged off. An FCRA attorney may be able to tell you quickly and free if you might have a case against the creditor, or the credit bureaus. §1681e(b) I think would be an issue for one or either of them, the bureaus and the creditor.

Before an FCRA claim could be possible against ether the creditor or CRAs, the OP must file a fact specific dispute of the TL with the CRAs. 

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9 minutes ago, BV80 said:

Before an FCRA claim could be possible against ether the creditor or CRAs, the OP must file a fact specific dispute of the TL with the CRAs. 

Really? News to me. I haven't ever filed a dispute first. But I also haven't had to actually file a suit either. I guess you could call my dispute (against a creditor) my demand letter.

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15 minutes ago, alwayswinning36 said:
 

Really? News to me. I haven't ever filed a dispute first.


15 U.S.C. 1681s-2(a) and (b) are the dispute sections of the FCRA.  1681s-2(a) allows one to dispute directly with the creditor, but there is no private right of action for a violation of that section. See 1681s-2(c)(1).

Purcell v. Bank of America (7th Circuit Court of Appeals, 2011)

“Section 1681s-2(c)(1) provides that the portions of the Act allowing awards of damages to private parties do not apply to claims under subsection (a).”

1681s-2(b) shows that a dispute must be filed with the credit reporting agencies and the agencies notify the creditor/furnisher.  That is where the private right of action comes in.

Alam v. Sky Recovery Services (SD Texas, 2009)

“In this case, Alam's own allegations show that there was no notice of a disputed charge or debt sent to a credit reporting agency that in turn notified the defendants. Instead, Alam alleges that he personally asked Sky Recovery to remove the negative information from his file at the credit bureau. Alam alleges that he, not a credit reporting agency, called Sky Recovery and Swearingen to dispute the debt and complain. Alam's pleadings show that he did not dispute the debt in writing to a credit reporting agency. Alam's pleadings show that the notification the defendants received came from Alam, not from a credit reporting agency. The duties imposed by 15 U.S.C. § 1681s-2(b) were not triggered in this case.”

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@panic unit

You must first file a fact specific dispute with the credit reporting agencies (CRAs). In order to claim a violation of the FCRA, furnishers (creditor’s and collection agencies) must receive notice of the dispute from the CRAs.   You can dispute directly with the furnisher, but there is no private right of action for a violation of a direct dispute.  You are in the 6th Circuit. 

In light of § 1681s-2(c)'s express limits, consumers may step in to enforce their rights only after a furnisher has received proper notice of a dispute from a CRA.  Boggio v. USAA Federal Sav. Bank 696 F3d 611, 614 (6th Cir. 2012).

 

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10 minutes ago, BV80 said:
 
 

@panic unit

You must first file a fact specific dispute with the credit reporting agencies (CRAs). In order to claim a violation of the FCRA, furnishers (creditor’s and collection agencies) must receive notice of the dispute from the CRAs.   You can dispute directly with the furnisher, but there is no private right of action for a violation of a direct dispute.  You are in the 6th Circuit. 

In light of § 1681s-2(c)'s express limits, consumers may step in to enforce their rights only after a furnisher has received proper notice of a dispute from a CRA.  Boggio v. USAA Federal Sav. Bank 696 F3d 611, 614 (6th Cir. 2012).

 

Going the route you are articulating, I would mention 1681i and 1681s-2b. 1681i would provide for the grounds against the credit reporting agency, or bureau while 1681s-2b would provide the grounds against the information furnisher, in this case the OP creditor. However, these both apply to the investigation of the inaccuracies which would presumably be raised accordingly by the OP, e.g. "this specific account is wrong", "this is why it is wrong", "investigate this please. If you will not investigate it then remove it from my report." I was just saying news to me because I personally have resolved issues with similar matters, myself. Without ever filing a suit. Just sending a letter threatening to sue if it wasn't resolved. And voila. But he or she should still contact an attorney and see what might be in the cards for them worst case scenario.

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8 minutes ago, alwayswinning36 said:

Going the route you are articulating, I would mention 1681i and 1681s-2b. 1681i would provide for the grounds against the credit reporting agency, or bureau while 1681s-2b would provide the grounds against the information furnisher, in this case the OP creditor. However, these both apply to the investigation of the inaccuracies which would presumably be raised accordingly by the OP, e.g. "this specific account is wrong", "this is why it is wrong", "investigate this please. If you will not investigate it then remove it from my report." I was just saying news to me because I personally have resolved issues with similar matters, myself. Without ever filing a suit. Just sending a letter threatening to sue if it wasn't resolved. And voila. But he or she should still contact an attorney and see what might be in the cards for them worst case scenario.

Yes, 1681i provides for action against the CRAs if they fail to properly investigate a proper dispute filed with the CRAs.   The CRAs must receive notice of the dispute from the consumer.

Sometimes threatening letters work.  However, one should follow the proper procedures just in case those letters fail.

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