Misconception #1
The statute of limitations regarding credit reporting and
barring collectors from suing to collect debts are the same.
Correction: Incorrect.
The two statutes of limitation have nothing to do with
each other. For example, if you defaulted on a debt in California, the
collector cannot sue you after four years have elapsed.
However, the item can still be reported to the credit
reporting agencies for seven full years. That means the collection will become
a “time barred” debt a full three years before it can no longer be included on
a consumer credit report.
Misconception #2
If I make a payment on a defaulted debt or collection,
I’m restarting the 7-year credit reporting time frame.
Correction: Incorrect.
The 7-year clock begins at a very well defined point in
time relative to the original debt. Credit reporting can occur for no longer
than seven years from the date the original debt was charged off (or subject to
a similar action). That means you can make payment after payment after it has
been charged off or sent to collections and the date from which the counter
begins cannot be updated to be any more recent.
FYI: There are exceptions to this rule for defaulted
student loans.
Misconception #3
If a creditor sells a defaulted debt to a debt buyer or
collection agency, the buyer can report the collection to the credit bureaus
for seven years from that time.
Correction: Re-Aging
Re-aging, in the credit reporting world, is when a
creditor or collector changes the date from which the 7-year credit reporting
period begins to make it more recent, thus causing an item to remain on a
credit report longer than the seven years allowed by Federal law. Re-aging
violates the Fair Credit Reporting Act, the Fair Debt Collection Practices Act.
It is a common (and completely legal) practice for a debt buyer to purchase
defaulted debt from a creditor and then attempt to collect those debts. It is
also common (and completely legal) for a debt buyer to sell those debts to
another debt buyer so that the newest buyer can then attempt to collect those
debts.
What is NOT legal is for any owner of the debt, present
or past, to cause the “purge from” date associated with any negative credit
report entry to be updated so that it causes the negative item to remain on a
credit report longer than seven years from the original account’s charge off
date.
Regards,
Ken Strey
Scorewell, Inc
Empowering People to Live Extraordinary Lives
Phone : (925) 478-5213 Fax : (925) 226-1883
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