Charged off Student Loan

[Anonymous]

Hello all,

I completed a chapter 13 bankruptcy in Dec '11 during which one of my private student loans was charged off the by the OC.  I have made small payments for the last 3 months and have verbally accepted a settlement offer from the OC to setlle for less than full amount owed, which is what the woman said would be reported on my CR.  My mother co-signed for this loan and it has also been charged off on her CR and will reflect the settlement as same on her CR.  I want to do what is right by my mother and to pay back the loan.  It is my understanding that in NY a settled account will be removed from the CR 5 years after DofFD, so now that it has been about 4 years since my DofFD will the chargeoff/settlement come off in about a year?  Or did I reset the clock by making the 3 small payments?  In which case I would assume I should just continue paying the small amount until the 7 year mark when the chargeoff is removed and then I can revisit the issue.  Does that sound about right?  Should I attempt to renegotiate better setllement terms to improve my mother's CR?  Can I now that I verbally agreed and am awaiting the letter from the OC?

Thank you all for your replies and insight.  Please let me know if any clarification is needed to get the best possible answer.

-Nick

[SoulMaster]

Charge Off is an accounting term, it doesn't mean you don't owe the money.

If you have a settlement letter in writing, and it's from the OC, and you pay it, the status should change to Settled for Less than the amount owed.

It's highly unlikely that your mother will be able to remove it (or get better terms) listed on her CR.  She broke rule #1: Never co-sign for anything, ever.  Then you screwed her by not paying the bill, and she get's to pay the "shouldn't have cosigned" tax by having a derog on her CR until it falls off.  It's life, move on and make sure you both learned your lessons.  (Sorry for that tough-love, but there's no reason to sugarcoat such a simple truth.)

Final note: If you became current by making those payments (or you made them and they made you current by forebearancing the rest) then yes, you reset the clock and are extra-screwed.  I don't know the laws in NY, though, so I could be wrong.

-SM

[pizzadude]

Here's a link to a recent discussion about the NY State credit reporting time period:

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/NY-5-Year-rule-on-reporting-Charged-off-accou...

[RobertEG]

If exclusion of the CO were be governed only under the federal FCRA, then the period for exclusion would run ONLY from the DOFD.

That is because the federal FCRA added section 604(c), mandating that the running of the exclusion period for a collection or charge-off is based only on the DOFD on the OC account.

The NY state version, setting an exclusion period of 5 years for paid COs and collections, does not include a similar provision that explicitly bases the period upon DOFD.  Rather it is based on the same original provision of FCRA 605(a)(4) prior to its amendment, which specifies the ambiguous date it was "placed for collection or charged to profit and loss."  I know that at least one CRA bases the NY state exclusion period on the date of CO or collection referral, and not DOFD.

[Anonymous]

Thanks for all the info.  One point of clarification, did I "reset the clock" by making the 3 months of payments?