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How long can these score killers remain on your credit reports?

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  • How long can these score killers remain on your credit reports?

    May 2, 2011

    So you’ve made some credit mistakes. With over 35% of the population scoring below 650 on the FICO scoring scale, you’re certainly not alone. But now that you’ve made the mistake, how long are you going to have to live with it?

    Each and every negative item has a reportable statute of limitations. That means the credit bureaus can legally report it for some period of time before it must be removed. The general consensus is seven years for the credit reporting of negative items. And, while that’s correct for many negative credit items, it’s not always right and certainly not always that simple.

    Bankruptcy

    This one has possibly the most confusing statute of limitations so let’s get it out of the way first. Chapter 7 bankruptcies (liquidation of all statutorily dischargeable debts) can remain on your credit files for ten years from the date filed. Chapter 13 bankruptcies (Wage earner programs where you’re still making payments to the trustee) can remain on file for seven years FROM THE DISCHARGE DATE. This is important because most people believe 13s have to be removed seven years from the filing date, which is incorrect. It normally takes three to five years for a Chapter 13 to discharge. That’s when the 7 years begins. The cap on all bankruptcies is ten years so most 13s remain on file for a full ten years, just like Chapter 7s.

    Tax Liens

    This one has the longest statute of limitations and must be broken down into three categories; released, unpaid, withdrawn.

    Released Tax Liens – Released liens can remain on file for seven years from the date released. This included liens that have been settled for less than you really owe.

    Unpaid Tax Liens – Sit down. Unpaid tax liens can remain on your credit file indefinitely. That’s the bad news. Now the good news…

    Paid and Withdrawn Tax Liens – Paid tax liens normally stay on file for seven years, but the IRS just announced that they will withdraw the lien if paid in full AND the taxpayer requests a withdrawal. The credit bureaus do not report withdrawn tax liens so they will come off your files almost immediately if you get them withdrawn.

    Defaulted Government Guaranteed Student Loans

    Interestingly, the Fair Credit Reporting Act doesn’t govern the amount of time defaulted student loans can remain on your credit reports. The amount of time is actually governed by the Higher Education Act instead. Defaulted student loans can remain on your credit reports for 7 years from the date they are paid, 7 years from the date they were first reported or 7 years from the date the loan re-defaults. The point you should take away from this…pay your student loans!

    The Seven Year Club

    The following items can remain on your credit files for seven years.

    Delinquent Child Support Obligations
    Judgments – Seven years from the filing date whether satisfied or not.
    Collections – Seven years from date of default with the ORIGINAL creditor, not seven years from when the collection agency buys or is consigned the debt.
    Charge Offs – Seven years from the date of the original terminal delinquency.
    Settlements – Seven years from the date of the original terminal delinquency
    Repossessions and Foreclosures – Seven years from the date of the original terminal delinquency.
    Late Payments – Seven years from the date of occurrence.

    You’ll notice that I use the term “terminal delinquency” several times above. The seven year period actually begins 180 days AFTER the original delinquency that leads to a collection, charge off or similarly negative action. So, technically these items remain on your credit file for 7.5 years from the date of the last delinquency that precedes the terminal delinquency.

    The Forever Club

    If your credit report is being accessed for a loan of $150,000 or more then none of the seven and ten-year rules are binding. That means the credit bureaus COULD maintain this negative stuff permanently but only for credit reports where you’ve applied for a higher dollar loan. They also have an exemption for credit reports sold for employment screening where the job is expected to pay $75,000 or more. Thankfully the credit bureaus choose to use the seven and ten year guidelines regardless. Whew.

    You Don’t Have to Do Anything, Unless

    Other than the tax lien withdrawal process described above the consumer doesn’t have to do anything in order to have negative credit information removed on or before the expiration of the applicable statute of limitations. The process of removing negative information is autopilot and based on a passive date trigger or “purge from date.”

    Now, since it’s based on a trigger date there is room for error in the cases of incorrect credit reporting. If the bank says you defaulted in 2005 and you really defaulted in 2004 then the credit bureaus are going to use the 2005 date. Then it’s up to you to argue with (or sue) the lender and the credit bureaus to get the dates corrected.

    Re-aging

    If you’ve never heard of this term let’s hope you never do. Re-aging is the illegal process of changing the “purge from date” so the credit reporting extends past the allowable period of time. This is not common but when it’s done, it’s usually a collection agencies or debt buyer who is breaking the rules. It’s a clear violation of the Fair Debt Collection Practices Act and the Fair Credit Reporting Act but the debtor has to know it has happened.

    There, now it’s all clear as mud.

    http://www.mint.com/blog/goals/credi...ions-05022011/
    Filed/discharged/closed Chapter 7 in 2010!

  • #2
    So, lets say my last mortgage payment was made March 2009 which means the first month I defaulted on my loan was April 2009. Then June 2009 I filed chapter 7 bankruptcy and included the house. The Bankruptcy was discharged September 2009 and the Foreclosure process was completed and we had to be out July 2010.
    How does that work with credit reporting? I mean, with the forclosure? When does the 10 years begin and is it reported twice.. once for the BK and again for the forclosure?
    Hope I made sense. I'm not sure. LOL
    Last edited by lorrieduke; 06-21-2011, 02:32 PM. Reason: bad spelling

    Comment


    • #3
      I repeat my broken record - this has now become the chief (thus far) means of social control by the elites on the rest of us.

      Comment


      • #4
        Couldn't agree more IamOld...let's say someone did not file BK but managed to somehow pay off all those "bad debts"....they will still be haunted for years and years by it all....yuck.
        Chapter 7 Filed: 04/21/2011, 341 Meeting: 05/31/2011, Report of No Distrubution: 06/02/2011, Discharged: 08/03/2011, Closed: 08/10/11

        Comment


        • #5
          Right!!

          Originally posted by disconapper View Post
          couldn't agree more iamold...let's say someone did not file bk but managed to somehow pay off all those "bad debts"....they will still be haunted for years and years by it all....yuck.

          Comment


          • #6
            So much worrying over scores. Most of us here are, or have filed BK, wasn't our credit and scores what got us the high card limits in the first place?

            I personally know since filing, all three of my scores just jumped, one is now up from 568 to 636......do I care.....absolutely not. With the exception of a car loan down the road (maybe), I will never have cards again. Cash only!
            Filed CH 7 4/15/11
            341 5/23/11
            DISCHARGED & CLOSED ON 7/27/11

            Comment


            • #7
              DOFD in this case is April 2009 however, they will mark the account IIB and that will stay for x years.



              Originally posted by lorrieduke View Post
              So, lets say my last mortgage payment was made March 2009 which means the first month I defaulted on my loan was April 2009. Then June 2009 I filed chapter 7 bankruptcy and included the house. The Bankruptcy was discharged September 2009 and the Foreclosure process was completed and we had to be out July 2010.
              How does that work with credit reporting? I mean, with the forclosure? When does the 10 years begin and is it reported twice.. once for the BK and again for the forclosure?
              Hope I made sense. I'm not sure. LOL

              Comment


              • #8
                Thank you df04527 but what is DOFD, IIB and how many years is "x" years?

                Comment


                • #9
                  sorry - -dofd is the date of first default - that is the date that starts the reporting timer. iib is included in bankruptcy and x years is either 7 for a bk13 or 10 for a bk7.

                  Comment


                  • #10
                    Point worth noting is that a judgment is bad whether it is paid or unpaid (so why pay it?).
                    If you pay it you may just start that 7 year clock ticking again which is bad.
                    Same thing for any old debt.
                    Once 2 or 3 years is past there is a disincentive to make any payments due to credit scoring.
                    So don't do it.
                    filed chapter 13..confirmed...converted to chapter 7...DISCHARGED!

                    Comment


                    • #11
                      Originally posted by IHateToBeEmo View Post
                      May 2, 2011


                      The Seven Year Club

                      The following items can remain on your credit files for seven years.

                      Judgments – Seven years from the filing date whether satisfied or not.
                      Collections – Seven years from date of default with the ORIGINAL creditor, not seven years from when the collection agency buys or is consigned the debt.
                      Charge Offs – Seven years from the date of the original terminal delinquency.
                      Settlements – Seven years from the date of the original terminal delinquency
                      Repossessions and Foreclosures – Seven years from the date of the original terminal delinquency.
                      Late Payments – Seven years from the date of occurrence.

                      You’ll notice that I use the term “terminal delinquency” several times above. The seven year period actually begins 180 days AFTER the original delinquency that leads to a collection, charge off or similarly negative action. So, technically these items remain on your credit file for 7.5 years from the date of the last delinquency that precedes the terminal delinquency.
                      I call bullshit on the 7 years plus 6 months.
                      All of my judgments and charge offs on Experian state that they will be removed 7 years after the date which corresponds to first delinquency, not 180 days later.
                      So much for "content farming".
                      filed chapter 13..confirmed...converted to chapter 7...DISCHARGED!

                      Comment


                      • #12
                        Originally posted by catleg View Post
                        Point worth noting is that a judgment is bad whether it is paid or unpaid (so why pay it?).
                        If you pay it you may just start that 7 year clock ticking again which is bad.
                        Same thing for any old debt.
                        Once 2 or 3 years is past there is a disincentive to make any payments due to credit scoring.
                        So don't do it.
                        Just to note that it is illegal for them to change the date. The ONLY negative that "restarts" the reporting clock when a debt is paid is a tax lien. When you pay a tax lien that will start the reporting clock of 7 years. When you pay a negative - they typically update the negative to say the date the account was paid but that date is a different field that is updated than the DOFD field. DOFD is the only date that the reporting clock runs from. So paying a negative (except for a tax lien) should NEVER restart the SOL clock.

                        Only the bureau reports typically even show you the DOFD field. Most third party vendors of credit reports do not show you the DOFD field.

                        IF they change the DOFD - then you have an issue that is illegal for them to do.

                        Clear as mud.....

                        Comment


                        • #13
                          Originally posted by IHateToBeEmo View Post
                          May 2, 2011

                          Bankruptcy

                          This one has possibly the most confusing statute of limitations so let’s get it out of the way first. Chapter 7 bankruptcies (liquidation of all statutorily dischargeable debts) can remain on your credit files for ten years from the date filed. Chapter 13 bankruptcies (Wage earner programs where you’re still making payments to the trustee) can remain on file for seven years FROM THE DISCHARGE DATE. This is important because most people believe 13s have to be removed seven years from the filing date, which is incorrect. It normally takes three to five years for a Chapter 13 to discharge. That’s when the 7 years begins. The cap on all bankruptcies is ten years so most 13s remain on file for a full ten years, just like Chapter 7s.
                          I've read on this forum that Chapter 13 is 7 years from the filing date, but I have also seen it said it is 7 years after discharge, so what is the correct answer?

                          Comment


                          • #14
                            7 years from discharge for a 13 and 10 years from filing date for a 7.

                            Now be advised, depending on the bureaus, some may delete them all at the 7 year mark. Without getting in to all the gory details, each bureau does things somewhat differently and it is mainly due to lawsuits being filed against them.

                            Comment


                            • #15
                              One thing I find strange is that Experian is the "odd duck" that can still report delinquent payment history of accounts discharged in Chapter 7 bankruptcy. This is contrary to Equifax and Transunion. For instance, even after I initiated a dispute about "charged off accounts" showing on my credit report after I filed bankruptcy, they refused to delete the payment history. My credit score could be 700+ but Experian has poisoned it for 7 years.

                              Comment

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