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BOFA CC Settlement ... reporting the charge-off date as the DOFD? NY 5-yr law?

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Anonymous
Not applicable

BOFA CC Settlement ... reporting the charge-off date as the DOFD? NY 5-yr law?

Never posted here before, but I've learned a lot from the questions and answers on this forum and gained a lot of encouragement from experiences others have shared. My thanks to all!

 

Years back (April of 2013), Bank of America agreed to settle a credit card in three installment payments. At the time, the account was reporting as 120 days overdue, and had been in various levels of default for many consecutive months (since January 2012). The account had not charged off or been placed with a collection agency.

 

The first (or second) installment payment was large enough to clear up the past due balance, and for that month as well as the next the account was reported as OK. Upon completion of the third installment payment (in June 2013), the account was reported to the CRAs as Paid/Current with a notation of "Settled for Less than Full Balance". A form 1099-C was issued at that time for the amount waived in settlement. The CRAs report the Date of First Delinquency as June 2013 and the scheduled deletion date as June 2020 or thereabouts.

 

Question: Is BOFA correct in re-setting the DOFD clock as a result of the settlement installment payments? And if not, is there any way to change the reporting, as a matter of goodwill or via disputes?

 

Also: Would the CRAs apply the New York five-year limit for paid charge-offs in this case, insofar as the account status is reporting as "Paid/Current" and the charge-off is only indicated via the settlement notation?

 

Any insight would be appreciated.

Message 1 of 7
6 REPLIES 6
RobertEG
Legendary Contributor

Re: BOFA CC Settlement ... reporting the charge-off date as the DOFD? NY 5-yr law?

Everything in the detailed scenario looks and quacks like a charge-off, even though it is stated that they did not report a CO.

 

The DOFD is irrelevant, and is not required to be reported, unless the creditor reported a charge-off.

The only use of DOFD is to determine the ultimate exclusion date of a CO or collection.

If the debt remained delinquent at 180 days from DOFD, then federal regs likely mandated its charge-off.

 

Once the delinquent debt was paid, then it could not therafter be charged-off.

Additionally, if the debt was not charged-off prior to the date you paid off the delinquency, then there is, by definition, NO DOFD to report.

DOFD is, by definition, the date of first delinquency preceding the date of a charge-off after which the debt remained continually delinquent.

 

You have an issue of whether/when the debt was properly charged-off.

Are you sure that they never reported a charge-off?  If they did not, they there is no requirment to have reported a DOFD.......

 

 

Message 2 of 7
Anonymous
Not applicable

Re: BOFA CC Settlement ... reporting the charge-off date as the DOFD? NY 5-yr law?

Thank you for your reply, Robert.

 

I am no expert but after careful examination of all three credit reports, as well as discussion with "Special Handling in the United States" at TU, it would appear that this has not been reported as a charge-off.

 

I don't know if there is a way to embed images into these posts, so here are the relevant items from the credit reports for this item. As you will see, there does not appear to have been any reporting of a charge-off status or event, but in each case there is a comment code indicating partial settlement. Please feel free to judge for yourself.

 

As you say, this walks like a charge-off and acts like a charge-off, and for tax and accounting purposes actually was a charge-off. (I was actually able to dig up the original form 1099-C from 2013. Can this be used to compel the creditor to report a DOFD or else delete?) Correct me if I'm wrong, but doesn't the settlement comment code have same meaning and the same effect (on FICO scoring and credit eligibilty) as reporting a charge off status?

 

 

XP:
Account Status: Closed
Payment Status: Legally paid in full for less than the full balance
Last updated: May 14, 2013
2013  Jan  Feb  Mar  Apr  May
           120  120  120  OK  N


EQ:
Current Status: PAYS AS AGREED
Date Reported: 07/12/2013
Date of Last Payment: 06/2013
Charge Off Amount: [BLANK]
Date of First Delinquency: N/A
Date of Last Activity: 06/2013
Activity Description: Paid and Closed
Comments: Account paid for less than full balance
2013  Jan  Feb  Mar  Apr  May  Jun
           180  180  180  *       *        NR

 

TU:
Date Updated: 06/19/2013
Last Payment Made: 06/18/2013
Pay Status: Current; Paid or Paying as Agreed
Date Closed: 06/19/2013
Date Paid: 06/18/2013
Remarks: >SETTLED-LESS THAN FULL BLNC<; CLOSED
Estimated month and year that this item will be removed: 05/2020
2013  Jan  Feb  Mar  Apr  May
           120  120  120  OK  OK

 

Message 3 of 7
RobertEG
Legendary Contributor

Re: BOFA CC Settlement ... reporting the charge-off date as the DOFD? NY 5-yr law?

There is no requirment that a creditor must report their charge-off to a CRA.

They likely took a CO, but can always decide not to report to a CRA.

 

The substantive difference is that if they never reported a CO, then they need not report a DOFD, as it has no relevance.

FCRA 623(a)(5) only requires reporting of a DOFD after the reporting of a charge-off or collection.

 

The 1099c does not relate to the charge-off, as debt remains fully due after a charge-off.

The difference between the total debt and the settlement amount becomes excused/cancelled debt, for which the IRS then asserts a tax liability if $600 or more.

The 1099c thus is not evidence of or basis for requiring any reporting of a charge-off.

 

The relevance is that if no charge-off is reported, there is no issue of eventual exclusion of that reporting.

With only monthly delinquencies having been reported, each has its own individual exclusion date of 7 years from the mo/yr of its occurence.

Once the monthly delinquencies become excluded at 7 years, the account continues of record (unless the creditor volunarily deleted), and is no longer derogatory.

 

Message 4 of 7
Anonymous
Not applicable

Re: BOFA CC Settlement ... reporting the charge-off date as the DOFD? NY 5-yr law?

But what about the "Settled" comment / notation (besides the monthly delinquencies in the account history)?

 

Isn't that notation *by itself* tantamount to reporting a charge-off, insofar as it indicates that part of the debt was written off?

Message 5 of 7
Anonymous
Not applicable

Re: BOFA CC Settlement ... reporting the charge-off date as the DOFD? NY 5-yr law?


@Anonymous wrote:

But what about the "Settled" comment / notation (besides the monthly delinquencies in the account history)?

 

Isn't that notation *by itself* tantamount to reporting a charge-off, insofar as it indicates that part of the debt was written off?


No. A charge off is a determination that a debt is likely to be uncollected. It may later be paid. A write off from settlement cannot be later collected on. They are apples and oranges. Comments do not have any impact on scoring anyway.

 

The account only has monthly lates as derogatories. Those monthly lates will become excluded individually as each one ages past 7 years. At that point the account may remain on your reports as a positive account for ten years past its closure date. 

Message 6 of 7
Anonymous
Not applicable

Re: BOFA CC Settlement ... reporting the charge-off date as the DOFD? NY 5-yr law?

Thank you, Norman.

 

Between your explanation and Robert's I think I'm getting the idea.

Message 7 of 7
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