FRCA – Time Limitations related to charged-off accounts reported to credit bureaus

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 This is an actual letter I found while doing some research on time limitations rules based upon the FCRA. Clarke W. Brinkerhoff is a Federal Trade Commission attorney charged with responding to consumer complaints and questions regarding FCRA issues. It’s a little complicated, so put on your thinking cap and read CAREFULLY. Division of Financial Practices Clarke W. Brinckerhoff Attorney 202-326-3224 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 1. Section 605(b) provides that there is no time limit applicable to a report made in connection with credit involving a principal amount (or insurance with a face amount) of $150,000 or more, or employment for a salary of $75,000 or more. Prior to September 1997, those amounts were $50,000 and $20,000, respectively. 2. The Consumer Credit Reporting Reform Act of 1996 (Title II, Subchapter D, of Public Law 104-280, signed into law on September 30, 1996), made many other changes to the FCRA. 3. Commentary on the Fair Credit Reporting Act, 16 CFR Part 600 Appendix, comment 605(a)(4)-2. 55 Fed. Reg. 18804, 18818 (May 4, 1990

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Here is the entire legal text of the Fair Credit Reporting Act pertaining to the credit reporting time period (if you quote it is “Section 605 of the FCRA”):
§ 605. Requirements relating to information contained in consumer reports [15 U.S.C. § 1681c]
(a) Information excluded from consumer reports. Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:
(1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.
(2) Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.
(3) Paid tax liens which, from date of payment, antedate the report by more than seven years.
(4) Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.⁽¹⁾
(5) Any other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years.¹
(b) Exempted cases. The provisions of subsection (a) of this section are not applicable in the case of any consumer credit report to be used in connection with
(1) a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more;
(2) the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or
(3) the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more.
(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.
(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.

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• FRCA Section 623 – Disputing a listing with the Original Creditor (consumercreditwatch.wordpress.com)

How To know if a trade line has been RE-Aged by a collection agency

Share | If you have finally decided to take a look at your credit report (this can be scary for some – for others, not so much) and you see some very old, maybe even ancient debt that you thought should have been long gone by now, it might be because they have been re-aged. This is not a new concept in the world of credit repair. In fact, re-aging of debts is about as old as the bureaus who keep the records. It is a practice proliferated by collection agencies that allows them to keep a debt listed on your credit report in hopes that you will pay it off even though you don’t have to any longer. This practice is illegal. The Fair Credit Reporting Act dictates that most debts can only remain on your credit report for 7 years. The proverbial "clock" starts ticking at exactly 180 days from the date of first delinquency; the day that your payments to the original creditor were first classified as late.
Don't confuse the statute of limitations for lawsuits with the credit reporting period's statute of limitations. These are two totally different time frames. The statute of limitations for lawsuits refers to the amount of time a debt collector can legally sue you in your state. Each state has different statutes of limitations. Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies. This law is known as the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer’s credit report for 7½ years. The clock starts approximately 180 days after the date of first delinquency on the account.
The Federal Trade Commission lists the following steps as the appropriate method for resolving credit reporting inaccuracies. This is codified in § 632 of the FCRA, and 15 U.S.C. § 1681s-2.

Step 1: Get Your Credit Report

An amendment to the FCRA requires each of the nationwide consumer reporting companies -- Equifax, Experian, and TransUnion -- to provide you with a free copy of your credit report, at your request, once every 12 months.There is only ONE website that allows a person to get a free copy of their credit every 12 months. It is called AnnualCreditReport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can print this FTC form.

Step 2: Look for Errors

Review the report and compare the information it contains to information you know to be accurate. In particular, make sure the report contains your accurate:

1. Name
2. Social Security number
3. Address and previous addresses
4. Accounts and account numbers
5. Date of first delinquency on each of your trade lines

If any of the above information is inaccurate, the consumer credit reporting agency may have added incorrect information to your account accidentally. This is very common. If incorrect addresses or Social Security numbers appear, this may be evidence of someone using your identity.
Under the FCRA, both the consumer reporting agency and the information provider – original creditor (i.e., the person, company, or organization that provides information about you to a consumer reporting agency) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the consumer reporting agency and the information provider.

Step 3: Correct the Errors

Tell the consumer reporting agency, in writing what information you think is inaccurate. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Send your letter by certified mail, "return receipt requested," so you can document what the consumer reporting agency received. Keep copies of your dispute letter and enclosures.

Consumer reporting agencies must investigate the items in question -- usually within 30 days -- unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. (please see my article on e-Oscar for information on how this is ALWAYS done incorrectly).After the information provider receives notice of a dispute from the consumer reporting agency, it must investigate, review the relevant information, and report the results back to the consumer reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide consumer reporting companies so they can correct the information in your file.When the investigation is complete, the consumer reporting agency must give you the results in writing and a free copy of your report if the dispute results in a change. This free report does not count as your annual free report. If an item is changed or deleted, the consumer reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The consumer reporting company also must send you written notice that includes the name, address, and phone number of the information provider.If you ask, the consumer reporting agency must send notices of any corrections to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.

If an investigation does not resolve your dispute with the consumer reporting agency, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the consumer reporting agency to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.

Re-aged collections on your credit report can leave you getting turned down for loans and credit you actually qualify for simply because a collection agency is violating federal law. If you suspect that a collection agency is intentionally reporting the wrong dates to the credit bureaus in an effort to leave its black mark on your credit report for longer than the law allows, your first course of action should be to get a copy of your credit report from each credit bureau – Experian, Equifax and TransUnion.
Remember, federal law entitles you to one free credit report per year. If you order that free credit report from AnnualCreditReport.com, you won't have to deal with giving out your credit card number and then canceling any ridiculous subscriptions later on down the road. AnnualCreditReport.com is regulated by the FTC, and its the only place you should turn to for free credit reports.

Find Each Collection Account's Removal Date
Find the correct deletion date, flip to the collection accounts section of each credit report. The error you're searching for is collection accounts that show up on your credit report for longer than the time limit allowed by the Fair Credit Reporting Act. The FCRA says that collection accounts must be deleted from your credit report 7 years from the date of first delinquency on the original account. The date of first delinquency is 180 days from the date of your very last payment to the original creditor. The most effective way to verify the first day your account went delinquent is to find the paperwork that should have been sent to you by the original creditor, or call them and ask for the information.
If the Credit Bureau Doesn't Delete the Entry
If the credit bureau doesn't delete the re-aged collection account from your credit report, its time to take the fight directly to the collection agency. Send the company a letter noting the following:

1. You recently requested the name and address of the original creditor from the collection agency and the date of first delinquency for that particular debt occurred more than 7 years ago.
2. The credit bureaus deleted the original creditor's negative tradeline after 7 years and 180 days in compliance with the FCRA. The collection account should have been removed at the same time.
3. You notified the credit bureaus of the discrepancy and the credit bureaus contacted the collection agency, which verified the dates were accurate when, in fact, they couldn't be if the original creditor for the account was accurate.
4. The dates for the collection account were clearly re-aged – an illegal practice under the FCRA.
5. The collection agency must immediately delete its tradeline from your credit report to remain in compliance with federal law. If it does not, you will report the collection agency to the Federal Trade Commission for re-aging, contact your attorney general and file a lawsuit against the company for violating the FCRA.

If the collection agency persists, or ignores you, take more aggressive action by filing a complaint with your local Attorney General’s Office. If you can, have an attorney contact the collection agency on your behalf and prepare to send them a Summons indicating your intention to file a lawsuit. Most collection agencies will indeed respond to this by deleting the inaccurate information.

Related articles

• Fair Credit Reporting Act - 101 (consumercreditwatch.wordpress.com)
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Can accumulating enormous debt have an effect on your credit score?

Share |  Posted April 19, 2013 by guest writer Andy Raybuck at AscendantEquity.com

Can accumulating enormous debt have an effect on your credit score?
If you have incurred enormous debts, then you will have to take the necessary steps to pay them off. The company may write off your debt so that they can get tax benefit but, generally, your debt gets sold to a collection agency. The agency may either take legal action against you or sell it to the other collectors. This will ultimately fall off your credit report and leave a negative impact on your credit score for several years. If debts have become unmanageable for you, you may take the help of credit card consolidation and get rid of debt problems soon.

Old debts – What is their reporting time?
The old debts generally get charged off when you do not agree to pay them. As such, the banks usually write off credit card outstanding balance within 180 days of negligence. The bill then gets sold to the debt collectors and it appears on your Equifax, Experian and TransUnion credit reports for seven years. The collection agencies may add up their own entries that will stay on the credit report for the same period of time. With having old debts, your credit score will get lowered till they get removed automatically in seven years.
Debt – What effect does it have on your credit score?
There are several factors such as old and new debts that affect your credit score to a great extent. The old debt consists of collection agency accounts and charged off bills that are a part of your credit report. This includes 35 percent of your credit score. You counterbalance the effects of the old debt by maintaining revolving account balances low and paying off the present accounts within their due date. Lenders will show more interest in your present financial condition than your previous mistakes.
Debt Settlement Law – What do you need to know about it?
Debt settlement is an industry that has conventionally not been regulated. As a result, many consumers have taken undue advantage by deceitful individuals in this sector. It has been undecided as to what organization should be controlling the debt settlement industry. Attorney Generals of individual states have varied in their approaches to safeguard the people. This has created a puzzled network of rules and regulations that often leave the consumer susceptible to untrustworthy debt settlement companies.
The Federal Trade Commission (FTC) has formulated a set of new regulations that will enable the FTC to better administer the debt settlement industry in a more uniform manner. The new FTC rules require that you do not need to pay any fees till debt settlement services takes place. This provides assurance to the clients that they’ll receive the services they had enlisted for implementation.
Old accounts – What are its considerations?
The old accounts usually get removed through the dispute process by the Fair Credit Reporting Act if there appears any error in the credit report entries. You can obtain your free credit reports through AnnualCreditReport.com and find even a small incorrectness to dispute with Equifax, TransUnion and Experian. The credit bureaus are needed in order to attempt legalization with the lender. The lender may even be out of the business if the debt is old by many years. However, if they fail to validate, it means that the wrong entry will be removed from your credit report. This, in turn, will help you raise your credit score.
Old debt – How is statute of limitation different from one state to the other?
You need to know that old debt has a statute of limitation that varies from state to state. This is the reason as to why the collection agency or the creditor cannot file a suit against you when the statute has been passed. The NOLO legal website cautions that dishonest debt collectors purchase your old debts and, in turn, make false threats to get the payments. They may even tell you that they’ll put previous bill on your credit report and hurt your credit score. However, they do not have the legal right to do so. Tell the debt collectors that you are aware about the law very much and will dispute for change in the credit report and report them to your state attorney general in case they may follow through.
Thus, if you have accumulated huge debt, this will hurt your credit score. As such, you should try to pay off your debts on time. This will prevent you from dropping your credit score.

The Consumer Financial Protection Bureau Turns its Gaze To Collection Agency Business Practices

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Today the Consumer Protection Bureau released a new set of rules allowing them to monitor and regulate how debts are collected by debt collectors, junk debt buyers, and any law firm or business who acts as a debt collector. These rules give the CFPB the authority to regulate any firm that has more than $10,000 in receipts from consumer debt collection activities. The CFPB’s authority over these business entities will begin on in January of 2013. This move by the CFPB to regulate debt collection activity is no doubt a response to the thousands of consumer complaints they have received. Companies like LVNV Funding, AFNI, Asset Acceptance Corp., and NCO Financial Systems are considered the worst of the worst amongst a murder of crows. The stories I have read on many credit repair blogs, and my own experience dealing with them confirm they are the biggest offenders of the law and will stop at nothing to collect a debt – whether the debt is valid or not. ”Millions of consumers are affected by debt collection, we want to make sure they are treated fairly”, said Director of the CFPB, Richard Cordray. “Today we are announcing we will be supervising the larger debt collectors in the market for the first time at the federal level” We want companies to realize that the better business choice is to follow the law, not break it”
Did you hear that sound? That is the collective sound of hundreds of thousands of Americans breaking forth in a great sigh of relief! Finally, the consumer has a protector – a champion who has not only the prerogative, but also the muscle to slay the beast…the Beowulf. Here are the details of what the CFPB is going to do regarding their supervision of collection agencies and how they are going to to do it:
Pursuant to the CFPB’s supervision authority, examiners will be assessing potential risks to consumers and whether debt collectors are complying with requirements of federal consumer financial law. Among other things, examiners will be evaluating whether debt collectors:

• Provide Required Disclosures: Examiners will evaluate whether debt collectors are properly identifying themselves and properly disclosing the amount of debt owed. The CFPB intends to ensure that debt collectors are upfront and clear with consumers.
• Provide Accurate Information: Examiners will assess whether debt collectors are using accurate data in their pursuit of debt. Inaccurate information can lead to collectors attempting to collect debt that consumers do not owe or have already paid.
• Have a Consumer Complaint and Dispute Resolution Process: As part of the CFPB’s compliance management review, examiners will assess whether complaints are resolved adequately and in a timely manner, whether the complaints highlight violations of federal consumer financial law, and whether the debt collector has a process in place to address consumer disputes.
• Communicate Civilly and Honestly with Consumers: Examiners will be assessing whether debt collectors have harassed or deceived consumers in pursuit of debt. For example, debt collectors should not be using obscene or profane language with consumers. Nor should they be engaging the consumer in telephone conversations repeatedly or continuously with intent to annoy, abuse, or harass. Debt collectors cannot threaten to imprison consumers who do not pay their debt or threaten to tell the consumer’s employer about the debt.

According to a report on the CFPB website, the CFPB is also publishing new questions and answers about debt collection in its Ask CFPB database. This interactive, online database answers consumers’ most frequently asked questions in plain language. The questions cover topics such as the definition of a debt collector, the best way to negotiate a settlement with a collector, and what a collector has the authority to do. You can also find information on debt collection on the FTC website under the Consumer Protection tab.