CRA SOL on collection account

Discussion in 'Credit Talk' started by StarStuff, Sep 14, 2003.

  1. Butch

    Butch Well-Known Member

    Re: Re: CRA SOL on collection accou

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  2. LKH

    LKH Well-Known Member

    Reporting time limit on collection

    Here are a couple of FTC staff opinion letters that may (or may not) help clear this a little.



    FEDERAL TRADE COMMISSION
    WASHINGTON, D.C. 20580

    Division of Credit Practices
    Bureau of Consumer Protection
    ~
    Clarke W. Brinckerhoff
    Attorney
    -
    (202) 326-3224


    August 31, 1998

    Mr. Clifford A. Johnson
    1917 Surrey Trail
    Bellbrook, Ohio 45305

    Re: FCRA §§ 605(c) and 623(a)(5) - "Commencement of the delinquency"

    Dear Mr. Johnson:

    This responds to your request for our views concerning the calculation of the period for which a consumer reporting agency ("CRA") is permitted to report accounts that have been charged off, placed for collection, or subject to similar action, under the amended Fair Credit Reporting Act ("FCRA"). You report that the following series of events occurred with respect to one of your credit accounts:

    "My last payment was received by the creditor 12/96. My payments were due monthly and I missed the 1/97 payment and all subsequent payments culminating in a charge off. This creditor does not report to the credit bureau until the account is 90 days delinquent. . . . The creditor contends that the delinquency did not occur until 3/97 because that is when they first reported it."

    Section 623(a)(5) requires a creditor that reports a chargeoff to a CRA to notify the agency (within 90 days of reporting the account) of "the month and year of the commencement of the delinquency that immediately preceded" the chargeoff. Section 605(a)(4) provides that the credit bureau may report the chargeoff for seven years. Section 605(c)(1) provides that seven year period begins 180 days from that date. In the scenario your reported, it is our view that the delinquency that led to the charge-off "commenced" in January 1997, the month the first payment was missed. Thus, that is the month and year that the creditor must report to the CRA, and that the CRA must use to calculate the time period dictated by Section 605.

    We are not in accord with the contention that the date "when (the creditor) first reported" the chargeoff to the CRA constituted the start of the delinquency. Sections 605(c)(1) and 623(a)(5) were recently added to the FCRA to correct the ineffectiveness of the previous FCRA, under which the date that started the seven-year period was uncertain or under the control of the creditor.(1) The legislative history of these provisions makes it clear that they were designed to correct the often lengthy extension of the period that resulted from delayed creditor action:

    Current law generally prohibits consumer reporting agencies from including in a consumer report accounts placed for collection or charged to profit and loss which antedate the report by more than seven years. The Committee is concerned that this seven year limitation is ineffective. In some cases, the ... action occurs months or even years after the commencement of the preceding delinquency. ... Consequently, the consumer report may contain such information even if the delinquency commences more than seven years before the date on which the report is provided to a user.

    The Committee bill specifies that the seven-year period with respect to information concerning a delinquent account charged to profit and loss . . . may begin no more than 180 days after the commencement of the delinquency immediately preceding the ... action.

    S. Rept. 104-185, 104th Cong., 1st Sess. 39-40 (emphasis added).

    Thus, Congress intended to establish a date certain -- the start of the delinquency -- to begin the obsolescence period (now seven years, plus 180 days).(2) The alternate view stated to you (that the date of reporting controls) is at variance with both the plain language of these amendments, and the intent of Congress in enacting them.

    In sum, we believe that the phrase "commencement of the delinquency that led to the action" in Sections 605(c)(1) and 623(a)(5) of the FCRA should be construed according to its normal meaning. If a consumer falls behind on an account and never catches up, the delinquency has its "commencement" when the first payment is missed. From that point on, the account is past due and thus delinquent.

    The opinions set forth in this informal staff letter are not binding on the Commission.

    Sincerely yours,

    Clarke W. Brinckerhoff


    ------------------------------------------------------------

    And


    UNITED STATES OF AMERICA
    FEDERAL TRADE COMMISSION
    WASHINGTON, D.C. 20580


    February 15, 2000

    Ms. Alaina K. Amason
    14155 Shire Oak
    San Antonio, TX 78247

    Dear Ms. Amason:

    This responds to your letter concerning the time limitations imposed by the Fair Credit Reporting Act ("FCRA") on the reporting of chargeoff accounts by a consumer reporting agency ("CRA," usually a credit bureau). We list your inquiries on this topic below in italics, with our replies immediately following each item.

    1. What reporting limits does the FCRA provide with respect to chargeoffs, and how long have they been in effect?

    Section 605(a)(4), which has been in effect since the FCRA became effective in April 1971, has always prohibited CRAs from reporting chargeoffs that are more than seven years old.(1) Section 623(a)(5), which became law in September 1997, requires a creditor that reports a chargeoff to a CRA to notify the agency (within 90 days of reporting the account) of "the month and year of the commencement of the delinquency that immediately preceded" the chargeoff. Section 605(c)(1) provides that the seven year period begins 180 days from that date. Both provisions were part of the major revision to the FCRA that were enacted in 1996.(2)
    2. Is the reporting period extended if (A) the original creditor sells or transfers the account to another creditor, (B) the consumer responds to post-chargeoff 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?

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

    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 chargeoff 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 chargeoff reported to a CRA before December 29, 1997, is not covered by the new provisions, as discussed in one of the enclosed letters (Kosmerl, 06/04/99). If a credit account was reported as a chargeoff 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.(3)
    The opinions set forth in this informal staff letter are not binding on the Commission.

    Sincerely yours,

    Clarke W. Brinckerhoff
     
  3. Butch

    Butch Well-Known Member

    A couple of things would help tremendously, although I cannot answer your question with a legal site re: SOL in NY.


    When we speak of the SOL we are referring to the statute of limitations for collection. If the accounts are paid, the SOL has no application to you, so lets drop that part of the convo.

    The 7 year reporting period is the "reporting period", and lasts 7 years (federally speaking).

    Some states enact additional protections beyond the FCRA, which are more favorable to the consumer. Apparently NY is one of them. So your RP is 5 yrs. on PAID accounts.


    So I wasn't kidding when I said you have a lot going on here.

    If you can simplify all this and just talk to them and convince them to just withdraw the acct., it'll be a hell of a lot easier. And I don't care how ya do it. Go see them personally, appeal your case, bitch, moan, groan, and cry if you have to. Tell them you worked very hard to do the "right thing" and made sure they were paid ASAP, albeit late.

    Is it possible to bypass all the confusion by convincing them (hosp and/or surgeon) to make an adjustment, in the interest of fair play?

    Once this potential has been exhausted, without success, we can work on your legal argument.

    ???

    BTW - don't worry about being "anal" about this. I wish everyone would struggle for a fuller understanding of what they're doing BEFORE they do it. So you're doing exactly what you're supposed to do. Just let's all keep our terminology straight.

    :)
     
  4. StarStuff

    StarStuff Well-Known Member

    Reporting time limit on collection

    Yes yes yes! Thank you, LKH! That validates the conclusion I thought made sense, given the statute, but I guess it was the terms being used that were so confusing.

    One thing: The account was sent to collection in July 1997, not July 2000. I'd edit it in your post only because it might confuse somebody else with a similar situation trying to do the math.

    I'll send off that CRRR letter tomorrow.

    Thanks so much!
     
  5. StarStuff

    StarStuff Well-Known Member

    Reporting time limit on collection

    Butch,

    Many thanks for your detailed responses. They have also helped me understand. And to think I once considered going into law because I enjoy puzzles. :)

    If they would just SAY WHAT THEY MEAN IN PLAIN ENGLISH!!! That NY State website took a whole evening of my life away and I came away even more confused than when I started. But then, that's probably part of the game plan. An ignorant public is a pliable public.

    As for negotiating with the surgeon, no need. They're paid off and now that I know I can legally require the CRA to delete the TL, I'll just send them a notice to that effect and wait to see what happens.

    BTW, they have also got one address incorrect and one that's more than 15 years old. Should I also ask them to delete that information in the same letter?

    In fact, would you advise sending a letter at all or going for a faster and easier (and cheaper) online correction request? The CRA in this situation is EX. The other two are highly accurate and contain no mention of the collection accounts.
     
  6. Trilivonel

    Trilivonel Well-Known Member

    Reporting time limit on collection

    Boy, do I still have a lot to learn! But let me get this straight. The SOL starts from the time of the first missed payment but if you make a payment after that the SOL doesn't restart again from the latest payment? And the 7 year, 180 day reporting period didn't go into effect until late December 1997? Please tell me if I got the understanding correct!
     
  7. StarStuff

    StarStuff Well-Known Member

    Reporting time limit on collection

    From what I understand (and remember, I'm new at all this), if you miss a payment but then bring it current by making a payment, that would "restart the clock" to the next missed payment. Otherwise, you could miss a payment on one of your CCs, make the payment up and pay faithfully for seven years, then default and claim that the CRA couldn't put any information about that account on your CR because your first missed payment was seven years ago.

    But wouldn't it be a magical world if you could ... ?

    The key seems to be that your missed payment set in motion the collection activity and eventual chargeoff. Am I correct, fellow travelers?
     
  8. Butch

    Butch Well-Known Member

    Re: Reporting time limit on collection

     
  9. Butch

    Butch Well-Known Member

    Re: Reporting time limit on collection

     
  10. Butch

    Butch Well-Known Member

    Just curious Star. Where did you read that?

    Makes me wonder if perhaps a particular state made it this way. Remember, we here speak federally. We just can't keep up with each individual state.

    The good news is there are so many here that someone lives in one of all 50 satates.

    And some of us have lived in most of em. LOL

    :)
     
  11. StarStuff

    StarStuff Well-Known Member

    Butch, I've been to so many posts and boards and links in the past few weeks that I can't remember where I read what! But I'll try to find out. I don't think it was specific to NY, however; I seem to recall that it was a general explanation of the reason for not allowing the CR's reporting "clock" to be reset by any activity on the account, including payment. The rationale is that it discourages payment on a defaulted account because the debtor would be reaffirming a negative line on his CR for another seven years every time he made a payment on the debt, which would make it more advantageous for him to just walk away from the debt and wait out the seven years from the first incidence of default.
     
  12. Trilivonel

    Trilivonel Well-Known Member

    Which is exactly what I did. When I was able to start payments again on my delinquent accounts, a friend advised me not to because the "clock restarts" and if I defaulted again the SOL would start from the day that I defaulted again. And also if I started payments and then completed them, the items I paid off will remain on my CRs five years after the date of the last payment. So is it safe to assume that this advice is wrong and that I should have just paid on the accounts? The answer is just for my knowledge because now there isn't any point; the majority of the OCs removed the TLs off my CRs but the CAs that they were assigned to are still listed on the CRs.
     
  13. StarStuff

    StarStuff Well-Known Member

    Far as I can tell, from my own situation, once the defaulted debt has gone into collection or whatever "negative action" has taken place as a result, the date of the first missed payment that led to that action is the date that starts the clock.

    In my case, my medical account's first missed payment happened at least three to four months before it was sent to collection, because I never paid on it at all. But I did pay it off entirely on settlement of my lawsuit. However, the "negative action" had already taken place, so I could pay on it whenever and however much I wanted and still be covered by the FCRA statute.

    So in your case, if the debt went to collection and you subsequently were able to resume paying on it, unless you reached some kind of agreement with your OC and/or the CA to eliminate the negative TL as a condition of repayment, I would say you were still able to count the first missed payment that led to the initial collection as the date that started the clock.

    What do the rest of you guys think?
     
  14. Butch

    Butch Well-Known Member

    Re: Re: CRA SOL on collection account

    I think you're learning fast.

    Once a negative action occurs there's a good chance it will end up on your report. So when that happens it's time to freeze everything and [IMMEDIATELY] start talking about catching up, in exchange for deletion of any neg. TL's, or reversal of the neg. action. Such as a withdrawal (as reported in error) from a CA.

    Keep in mind; if that doesn't work you still owe the money. It's just that now you switch gears and start arguing inaccurate reporting via FCRA.


    Further, If a neg. action has NOT yet occurred, by all means available, catch it up. The stupidest advice I've ever heard is to stop paying and let something charge-off. What logic is that? Let your situation get drastically worse so you can fix it? lol

    This advice is coming from one who doesn't mind dodging responsibility. I'm a firm believer in; "if we borrow we must repay".

    First, it establishes "financial integrity" which will have long term ramifications for ones life. It is this financial integrity that will allow you to do whatever you want. Start a new business, take a trip around the world, become a Millionaire, etc. (The foxy Mrs. Butch and I are departing for Hawaii in Dec., and may move there permanently).

    Second, it will dramatically increase your own self image and how you perceive your just, upright juxtaposition in the world we live in. When you look in the mirror, do you like whom you see?

    There are extraordinary [spiritual] gifts available, but only to those who meet the world squarely on the worlds terms.

    :)
    .
     
  15. Trilivonel

    Trilivonel Well-Known Member

    Re: Re: CRA SOL on collection account

    Actually the accounts were already charged-off but I wanted to start payments because I believe that since the companies extended credit to me, in good faith I should pay it back. That's when I got the advice of a friend about the "clock restarting" if I start payments and that the negative item will remain on my CR from the latest payment date. Also I didn't know that you can negotiate the removal of the item once it is paid off. I thought that it had to remain and just have it state "paid as agreed". How do I go about negotiating the removal during a settlement?
     
  16. StarStuff

    StarStuff Well-Known Member

    Re: Re: Re: CRA SOL on collection a

    That's a very good question and one you should get several responses to before you act. I think from what I've read on these boards that many people regret saying things in certain ways that later came back to bite them. Things like "my account" instead of "this account," for example, which affirms that it is your debt -- not a good thing to have on written record if you need to dispute it down the road to get it off your record.

    Several people compose the letters they intend to send to creditors, CAs or CRAs and post them here before they send them, to get feedback from forum members. In your position that's what I would do, after getting enough advice and doing some reading of the posts you can find on the subject. Try a search under "negotiation" for starters.
     
  17. sassyinaz

    sassyinaz Well-Known Member

    Re: Re: Re: CRA SOL on collection a

    This statement and position (not quoted, see above in red text) is contrary to the FCRA and NOT what it states, it is a plain language statute:

    http://www.ftc.gov/os/statutes/fcra.htm#605

    § 605. Requirements relating to information contained in consumer reports [15 U.S.C. § 1681c]

    (c) Running of reporting 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.

    (2) Effective date. Paragraph (1) shall apply only to items of information added to the file of a consumer on or after the date that is 455 days after the date of enactment of the Consumer Credit Reporting Reform Act of 1996.


    Please read this thread for verification and the factual information with links to the sources for confirmation:

    http://consumers.creditnet.com/straighttalk/board/showthread.php?threadid=49575

    Sassy
     
  18. lbrown59

    lbrown59 Well-Known Member

    1*My confusion comes from the date opened/date reported
    Which of these dates are valid for counting the SOL?
    can I start it even earlier, at the first billing from the OC?
    2*Bizwiz advised me in another thread to start with disputing the account as not mine. It is mine, though,
    3*My TU and EQ reports both said my FACO/FICO scores were lowered by having too many revolving accounts open.
    more things:
    4*This CR has "Self-employed" in Personal Info section; should I ask for change to this,
    5*will they verify,
    6*This CR has one incorrect address and one address over 15 years old. Should I ask to have these deleted?
    7*they said that the purpose of counting the SOL from the date the debt began and NOT from the date it was paid was to encourage instead of discourage payment.
    StarStuff
    =================
    1*Neither one
    2*So what do as he says.
    3* Don't go closing accounts as that is worse than this.
    4*Get that off
    5*With who??????????
    6*Certainly
    7*Well they sure didn't know what they were talking about because it isn't either one.




    PS
    New Member Must Reads.---------------------------
    http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&postid=350770#post350770

    http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&postid=314910#post314910

    http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&postid=352826#post352826

    Sample letters
    http://consumers.creditnet.com/straighttalk/board/index.php?s=

    WhyChats statute of limitations
    http://community-2.webtv.net/Y-chat/WhyChatsCredit/

    http://community-2.webtv.net/Y-chat/WhyChatsCredit/

    statute of limitations http://www.edebtnetwork.com/content/collection_laws.asp

    """"```--~~~~~~~~~--```'""'''






    THE END ** *** ** LB 59
    """"```--~~~~~~~~~--```'""'''
     
  19. lbrown59

    lbrown59 Well-Known Member

    1*My confusion comes from the date opened/date reported
    Which of these dates are valid for counting the SOL?
    can I start it even earlier, at the first billing from the OC?
    2*Bizwiz advised me in another thread to start with disputing the account as not mine. It is mine, though,
    3*My TU and EQ reports both said my FACO/FICO scores were lowered by having too many revolving accounts open.
    more things:
    4*This CR has "Self-employed" in Personal Info section; should I ask for change to this,
    5*will they verify,
    6*This CR has one incorrect address and one address over 15 years old. Should I ask to have these deleted?
    7*they said that the purpose of counting the SOL from the date the debt began and NOT from the date it was paid was to encourage instead of discourage payment.
    StarStuff
    =================
    1*Neither one
    2*So what do as he says.
    3* Don't go closing accounts as that is worse than this.
    4*Get that off
    5*With who??????????
    6*Certainly
    7*Well they sure didn't know what they were talking about because it isn't either one.




    PS
    New Member Must Reads.---------------------------
    http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&postid=350770#post350770

    http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&postid=314910#post314910

    http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&postid=352826#post352826

    Sample letters
    http://consumers.creditnet.com/straighttalk/board/index.php?s=

    WhyChats statute of limitations
    http://community-2.webtv.net/Y-chat/WhyChatsCredit/

    http://community-2.webtv.net/Y-chat/WhyChatsCredit/

    statute of limitations http://www.edebtnetwork.com/content/collection_laws.asp

    """"```--~~~~~~~~~--```'""'''






    THE END ** *** ** LB 59
    """"```--~~~~~~~~~--```'""'''
     

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