Yesterday we erroneously reported that while chargeoffs are supposed to disappear from your report after seven years, you can get that clock reset by making payments or otherwise communicating with the creditor.
Several commenters claimed this was a myth, and a nonbinding FTC staff opinion from 2000, agrees, as does TransUnion’s Steven Katz…
Ms. Amason of San Antonio, TX asks:
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.
Steven Katz, TransUnion (one of the major credit reporting agencies) spokesman, says:
• Most items, except for certain types of bankruptcies will remain on for 7 years.
• The 7 years will typically begin based upon the date that your payment became delinquent.
• Paying the account after a delinquency has been reported by a credit grantor will not have the impact of “resetting” the item.
• Contacting the credit grantor to dispute the item is possible and if it is determined that the item is not your responsibility, this can lead to the item being removed from your credit report.
So there you have it. For the most part, seven years is the absolute obsolescence time period. If the debt is still on your credit reports after seven years, dispute it. We did it once and it was really easy. — BEN POPKEN
FCRA Staff Opinion: Brinckerhoff-Amason [FTC.gov]