We speak with people all day long about their credit reports. Here is a review of the most common questions that we encounter about reporting periods for derogatory information, as well as guidance on resolving the related issues. These details, if properly understood and acted on, can make a significant difference in your credit score.
A Point of Caution
The following information involves the reporting periods for derogatory information on your credit report. In all cases, creditors are responsible for recording the commencement date of the reporting period. This date is coded in the credit file that is furnished to the credit bureaus, and eventually will tell the credit bureaus when to cease reporting. This commencement date is supposed to be inherited by subsequent collectors as well. In actual practice, neither creditors nor collectors are completely diligent in reporting or maintaining these important dates, hence the need for credit repair. Consumers are well advised to monitor old derogatory information to insure that it ceases reporting on schedule.
Chapter 7 Bankruptcy
A discharged Chapter 7 bankruptcy will show in the Public Records section of your credit report for 10 years from the initial filing date – please note that the filing date is different from, and prior to, your discharge date.
Debts that are discharged in a bankruptcy can continue to report for seven years. Handy credit repair tip! Once a debt is discharged it should not report with a past due balance, or as a charge off, or in a collection status; this derogatory information should be removed.
Dismissed Chapter 7 bankruptcies will report for ten years. A dismissed bankruptcy is a bankruptcy which was filed and thereafter canceled or disallowed.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy which has been completed will continue to report for seven years from the initial filing date, rather than the discharge date.
A Chapter 13 bankruptcy which was not completed will continue to report for seven years from the initial filing date.
Bankruptcy and the Fair Credit Reporting Act – A Legal Note
It may be of interest to note that the only reference to bankruptcy in the Fair Credit Reporting Act is a blanket rule that limits the reporting time to 10 years following the filing date. See § 605. [15 U.S.C. §1681c] (a). The credit bureaus, however, voluntarily make exceptions for Chapter 13 bankruptcies as noted above.
Collections – Overview
Collections are unique for the reason that they typically change hands, often several times during their lifetime. Important credit repair tip! Please note that only one collector at a time can legally report the debt; and only the collector that owns the debt can legally report it. All duplicate collection accounts for the same debt should be deleted from your credit report.
Collections can report for seven years plus 180 days from the original default date. The original default date is defined as the first time that you missed a scheduled payment prior to entering into a collection or charge off status. The original default date always begins with the original creditor and cannot be reset, nor can the reporting period ever be extended by subsequent collectors.
Charged Off Credit Cards – A Tip
Once a creditor has passed a charged off account to a collector they cannot report a past due balance. The balance should report as zero; the charged off amount may report on a separate line.
Unpaid judgments can continue to report for seven years or until the governing state statute of limitation has expired, whichever is longer. You need to check your state statute of limitations to know for sure. State statute of limitations for judgments range from 4 years (PA) to 21 years (OH), and in some cases may be renewed one or more times.
Paid judgments can report for seven years from the initial filing date. This is handy to know if you are in a credit repair program; you may quickly remove a judgment from your report if you are willing to pay it, as long as the original filing date is seven years old. For legal support see FTC Official Staff Commentary § 605(a)(2): “Paid judgments cannot be reported for more than seven years after the judgment was entered, because payment of the judgment eliminates any “governing statute of limitations” under this subsection that might otherwise lengthen the period.”
Paid tax liens may not report more than seven years beyond the date of payment. Unpaid tax liens may report as long as they are in effect. If you are in doubt consult a CPA or tax attorney.
Late payments on your student loans will cease reporting after seven years. Defaulted student loans are another story…
A 1991 amendment to the Higher U.S. Department of Education Act lifted all time limits for collection of student loans. The reporting of defaulted student loans on your credit report can now go on forever. In addition, a 1998 change in federal law made it virtually impossible to discharge a student loan in bankruptcy.
If you are in default on a student loan you are well advised to address the issue, sooner rather than later. Fortunately, there are excellent rehabilitation and consolidation programs now available to everyone. These programs offer affordable repayment options and can even erase the default status from your credit report! This can prove to be a painless and powerful step for anyone in a credit repair program. Explore your options today with the Student Loan Ombudsman Office at (877) 557-2575.
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