Very Old Debt Still Reported As Active on Credit Reports
My question involves collection proceedings in the State of: Texas
This is regarding a 2nd mortgage I took in 3/2000 in the state of Maryland for the purpose of home improvement. The loan was sold a few times, eventually ended up with Shellpoint. A foreclosure in 2011 did not cover any of the 2nd mortgage. The last payment I made was in January, 2010, about a year before the foreclosure.
This account is reporting as Active with a most recent missed payment date of 30 days. At least one credit report agency incorrectly lists Shellpoint as the mortgage originator.
I believe this account was charged off, but as stated it is reporting as Active (and is destroying my credit as a result). I don't have a 1099 from them, and they haven't contacted me in years.
I've disputed the debt with all three agencies, and no change. Is there any way to prove that the account is closed, in order to keep my report from showing "most recent missed payment" at 0-30 days?
Thanks for your help.
Re: Very Old Debt Still Reported As Active on Credit Reports
Chargeoff means nothing to YOU or to your credit report. It's a tax accounting thing for the lender. Foreclosure wipes out the security instrument (the lien) on the loan but doesn't erase the debt (in Maryland). They still can pursue collections against you for TWELVE years. The loan should however stop being reported to the credit bureas as of seven years from the delinquent date which should have been this February or March. The details as to the last payment is largely puffery.
Write back with what the credit bureaus tell you.
Re: Very Old Debt Still Reported As Active on Credit Reports
Puffery? Anyway, thanks for the reply.
As I understand it, "charge-off" in my case would mean quite a bit to the health of my credit report: The charge-off event occurred more than 6 years ago and my credit report/score should be improving somewhat due to the reduced impact a charge-off has over time. As compared to an account reported as "active" and having multiple recent missed payments, it should have a big impact. An account reported as charged-off six years ago cannot also be reported as having a 0-30 days late payment; only an active account can claim 0-30 days late. My guess is that the creditor knows this and doesn't care about accurate reporting until forced, because they wish to inflict as much damage as possible to my credit.
Bottom line, the account was charged off but is being incorrectly reported as active and my attempts to correct that reporting have failed. I don't know how to prove that the account was charged off. Any recommendations for a lawyer in the Austin, Texas area who can help?
Re: Very Old Debt Still Reported As Active on Credit Reports
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flyingron
Chargeoff means nothing to YOU or to your credit report.
A charge-off does not relieve the debtor of his/her responsibility for the debt. But it does indeed have a very significant impact on a credit report. It tells those reading the report that creditor was unable to collect and deemed the debt unlikely to ever be repaid. It is thus a very negative credit entry. It is for this reason that the federal Fair Credit Reporting Act (FCRA) includes reports of charge-off in the 7 year rule for when the item must drop off the credit report. See 15 U.S.C. § 1681c(a)(4). The OP is correct that after the passage of time, that old adverse credit entry is likely to be less damaging than reports that indicate the debt is recently delinquent.
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flyingron
The loan should however stop being reported to the credit bureas as of seven years from the delinquent date which should have been this February or March.
That’s not quite right. The FCRA does indeed mandate that entries on a credit report regarding “Accounts placed for collection or charged to profit and loss” must drop off after seven years. But what is widely misunderstood is that the seven years does not start to run on the date the account first becomes delinquent as is often believed. Rather, the rule for when the time starts to run is this:
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.C. § 1681c(c)(1). Thus, given the last payment in January 2010, it likely became delinquent in February 2010, as you indicated. You then add 180 days to that to determine when the seven year period starts, thus making it around August of this year that it would have to drop off.
The OP is entitled to have the credit report accurate. The first step is to contact the creditors/collectors reporting the erroneous information in writing asking that they correct the report to show the proper date of delinquency and the charge-off, if the charge-off occurred, along with making a written request to the credit bureau contesting the information as inaccurate. The FTC explains the rights of consumers under the FCRA and is a good place to start to understand your rights.
Re: Very Old Debt Still Reported As Active on Credit Reports
Thank you for taking the time to reply. The FCRA is a great place to start and I believe my situation falls within the protections it affords.
My challenge has been getting others (CRAs, mainly) to recognize the unusual nature of this account. I've disputed this a few times now and specifically stated in the dispute that an account which hasn't had a payment in six years cannot be classified as "active" (according to FDIC rules, at least) - the CRA probably ignores that detail and simply asks the creditor to verify the account without respect to the last payment date.
I'm happy to pay for professional help with this matter. Anyone know a lawyer in Austin, Texas who can help? (Note that I'm not interested in filing bankruptcy.)
Thank you.