Drop-Off Date for "Charged Off" Accounts

[Tom757]

Hello:

 

I have a question about delinquent credit card accounts which were ultimately charged off.

 

Quick background:  

- Due to a contested divorce, I ended up racking up a great amount of legal fees which were charged on credit cards.   

- Fast forward, I enrolled several credit cards into a “credit card relief” program from which I successfully “graduated” a little more than a year ago.

 

At this point in time, I have a question with respect to when the accounts will be removed from my credit reports.   I am aware about the 7-year rule from the first delinquency date.    However, I’ve come across additional information which might further extend the drop-off date(s).

 

Allow me to provide two examples…

 

Credit Card #1:
-    1st late payment occurred in 05/2017.
-    Account remained late from that point forward.
-    Settlement agreement was reached in 11/2017.
-    Single payment was made and account was “legally paid in full for less than the full balance" in 11/2017.
-    Thus, the drop-off date is estimated to be 11/2024.

 

Credit Card #9:
-    1st late payment occurred in 07/2017.
-    Account remained late from that point forward.
-    Settlement agreement was reached in 01/2018.
-    Monthly payments (between Jan/May 2018) were made and account was “legally paid in full for less than the full balance" in 05/2018.
-    Thus, the drop-off date is estimated to be either a) 07/2024 OR b) 01/2025.

 

My question:  For the 2nd example (i.e., credit card #9) could you please verify what’s the correct drop-off date?   Is it either 07/2024 or 01/2025?

 

Thank you,
TB
 

Edited February 19, 2023 by Tom757
Clarification

[MarvBear]

Welcome to CreditBoards.

[MarvBear]

Regarding your credit card #9, I used 07/01/2017 as the date of first delinquency, from which the account never again became current. Using the 7 years + 180-day rule, then in my estimation the account should be scheduled for removal on 10/26/2024

[Tom757]

MarvBear -- thank you for the response.  

 

I've never come across the 7-year PLUS 180-day rule.   Do you have a source for the +180 (aka +6 months) rule?

 

Thanks,

Tom

[shifter]

CRAs almost always use 7 years from DOFD. So on CC 1, it would be 5/24 and CC 2 would be 7/24. But if you get your paper reports, especially with TU, they will indicate the date it will be removed. And then that means you can dispute as obsolete with TU 6 months to the day before that date. 

[Tom757]

shifter -- ah, the TU paper reports reference is excellent.  

 

Although I have a digital subscription with Experian, I will request a copy of my TU report in hopes it'll list the date.

 

Thank you... I appreciate the additional insight. 

 

Cheers,

Tom

[MarvBear]

2 hours ago, Tom757 said:

MarvBear -- thank you for the response.  

 

I've never come across the 7-year PLUS 180-day rule.   Do you have a source for the +180 (aka +6 months) rule?

 

Thanks,

Tom

Yes, all you must do is read the FCRA as amended by FACTA which happened in 2003.  If you need a link, please advise.

[Tom757]

@shifter

 

Again, your recommendation to pull the TransUnion report was excellent.   As previously mentioned, I do have a subscription with Experian so I (kinda) didn't bother pulling from the other two Credit Bureaus.

 

So, I just pulled all 3 CRs electronically and the TU report did show (for all delinquent accounts) the "Estimated month/year when the item will be removed".   See attached JPG for illustration purposes.

 

Again, many thanks!

[Tom757]

@MarvBear -- I just noticed your latest post.  Yes, I'd welcome the link to both FCRA / FACTA.

 

Thank you,

Tom

[MarvBear]

You don't need anything but the link to FACTA, because it amended FCRA.  So here you go.  If you are repairing credit, it is a must read.

 

https://www.congress.gov/108/plaws/publ159/PLAW-108publ159.pdf

[Tom757]

@MarvBear -- excellent!   I just downloaded/saved the PDF.  I'll definitely give it a read.   

 

Does the FACTA include any "language" pertaining to the PLUS 180 days (above and beyond the 7 years).   I just searched for keyword "180" but nothing jumped out.   Thanks again.

Edited February 20, 2023 by Tom757

[MarvBear]

(c)Running of reporting period

(1)In general

The 7-year period referred to in paragraphs (4) and (6) 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.

 

15 U.S. Code § 1681c - Requirements relating to information contained in consumer reports

[MarvBear]

look up §605 

 

Here is an easier to read pdf version of the act.

 

545A-FCRA-08-2022-508.pdf

[Tom757]

 

@MarvBaer -- thanks for posting this (easier to read) FCRA version... besides, its publication date is much more recent.

 

I'm still trying to wrap my arms around (so to speak) about the legal terminology of the, e.g., "... upon the expiration of the 180-day period beginning..., etc.".

 

That is, available online references the "7-year period".    Ultimately, should I interpret the 180-day period as a "grace period" where CRs can/may use up to 6 months to remove the negative accounts?    For example, per the sample JPG (see above), that particular account is supposed to drop off in May 2024.   

 

Based on the 180-day period, should I interpret it such as my not having a legal standing of the removal until Nov 2024?   

Edited February 20, 2023 by Tom757

[hdporter]

7 hours ago, Tom757 said:

I'm still trying to wrap my arms around (so to speak) about the legal terminology of the, e.g., "... upon the expiration of the 180-day period beginning..., etc.".

 

That is, available online references the "7-year period".    Ultimately, should I interpret the 180-day period as a "grace period" where CRs can/may use up to 6 months to remove the negative accounts?    For example, per the sample JPG (see above), that particular account is supposed to drop off in May 2024.   

 

 

For clarity, I'm reciting the pertinent language again:

 

10 hours ago, MarvBear said:

(c)Running of reporting period

(1)In general

The 7-year period referred to in paragraphs (4) and (6) 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.

 

 

Quote

(4) Accounts placed for collection or charged to profit and loss which
antedate the report by more than seven years.   

 

Note: The language and subject matter of paragraph (6) has been revised and no longer references a "7-year period"

 

The intent of the reporting period limitation was to remove accounts 7 years subsequent to adverse action on the account, such as a charge off, placement for collection, etc.  A account charge-off is normally required when the account has suffered a 180-day delinquency.  The FCRA treats that delinquency period as an integral part of the adverse action and took steps to take it into account in establishing when a charge off/collection account is "obsolete" (may no longer be reported).  Thus, the formal timeline for removal of an account isn't 7 years from the adverse event, but instead another 6 mo, with the period to start with DOFD.

 

Potentially, the period that elapses between DOFD and a charge off/collection action may be greater than 6 months; namely when intervening partial payments reduce the delinquency status while still not bringing the account current. 

 

For reasons I'm not aware of, the CRA's decided to remove adverse accounts (in practice) 7 years from the DOFD.  This is 6 months earlier than required under the FCRA.  Further, as has been discussed, upon request the CRA's will remove such delinquencies at an earlier date (up to 6 mo earlier, but varies by CRA) under an action termed "early exclusion".

 

The CRA's are not required by statute to remove an account at their standard of 7 years post-DOFD, or earlier as permitted under their early exclusion period.  A request that they do so is granted by their own policy, not statute.

 

My fingers are crossed that this clears up some of the confusion to which the statute language may create.

[legaleagle2012]

15 hours ago, Tom757 said:

MarvBear -- thank you for the response.  

 

I've never come across the 7-year PLUS 180-day rule.   Do you have a source for the +180 (aka +6 months) rule?

 

Thanks,

Tom

 

https://www.occ.treas.gov/news-issuances/bulletins/2000/bulletin-2000-20.html

Uniform Retail Credit Classification and Account Management Policy: Policy Implementation

To
Chief Executive Officers of National Banks, Department and Division Heads, and All Examining Personnel

The guidance attached to this bulletin continues to apply to federal savings associations.

Purpose
On June 12, 2000 the Federal Financial Institutions Examination Council published in the Federal Register a final notice that revised the Uniform Retail Credit Classification and Account Management Policy originally published in the Federal Register on February 10, 1999. The Office of the Comptroller of the Currency is adopting the revised policy and will apply it to all national banks and their operating subsidiaries. OCC Bulletin 99-13 is hereby rescinded.

Policy
The policy establishes standards for classification and account management of retail credit in banks and thrifts. It generally requires that closed-end loans be charged off when 120 days past due and that open-end credit be charged off when 180 days past due.

[MarvBear]

I apologize for not being as thorough and precise as our two previous members have been.  My thanks for their continued edification.    I hope we have helped the OP to understand more fully what the law may be and how it may work in actual practice.

 

Please keep asking for the things you want help with, and we will try our best.

[Tom757]

@hdporter, @legaleagle2012, @MarvBear et al.:

 

First of all, I would like everyone who contributed to this post.  I truly, truly appreciate it!!

 

Generally speaking, I consider myself an economically frugal person.   Due to the contested divorce though, I ultimately had to add nine (9) accounts to a credit relief program resulted in my FICO score taking a serious hit.

 

Having graduated from the credit relief program ~15 months ago, my score has been consistently going up again.   The only thing that's holding me back from an 800+ score again are the delinquent accounts though.

 

W/ your help though, I have much more clarity on this item and I'm hopeful that all negative accounts should be removed within the next ~15-18 months.  

 

So, again, thank you for the continued assistance and education in this forum.  Your information has been a blessing.

 

Best,
Tom

[Tom757]

On 2/19/2023 at 12:31 PM, Tom757 said:

Hi -- I'm new to the CreditBoard.com forum... forgive me for asking follow-up.   I have just posted a different question in another sub-forum/topic.   I hope I have selected the appropriate sub-forum. 

   

 

Edited February 22, 2023 by Tom757
Clarification