How long before a credit card can be charged off?

[lamplight2012]

Hello, all.

There is a First Premier Bank cc on my Credit Report(s) & it appears that it was charged off after 30 days. Is there a rule for how long the payment have to be missed before a charge off occurs?

Thanks!

[Anonymous]

The only rule regarding Charge Offs I am aware of is that a credit card account MUST be charged off after 180 days delinquent. There is no minimum that I have ever heard of.

30 days is unusually fast. BUT appearances can be decieving as FP is known for VERY spotty reporting of lates.

[lamplight2012]

Thanks NormanFH,

Do you know who that rule is enforced by?

I sent a letter to First Premier Bank

On all three credit reports it says "September 2012 OK, October 30 days , & then a charge off in November of 2012

Hopefully they remove it. I used the template on this thread, and just changed the wording around

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/REMOVED-CO-FIRST-PREMIER-BANK-YEAH-SON/td-p/3...

[Anonymous]

AFAIK, the 180 day law is a federal banking regulation. It was put in place to keep companies from padding their book value with defaulted accounts (remember Enron?).

This one has the potential to backfire on you if there were unreported lates prior to October 2012. It's relatively recent, so they may still be able to access those records - or they may not, it depends on whether they have archived your account or not.

What I have noticed often happens with FP is that after disputing they will start reporting lates really inconsistently accross the bureaus, and if the consumer keeps complaining about the inconsistent reporting, they often just decide to delete the account.

[lamplight2012]

NormanFH,

From my Google searches that's what I found as well, and was my basis for disputing the 'spotty' reporting. Just wanted to confirm. You'd think they'd report accurately in these cases, so it wouldn't cause them to delete the whole tradeline. But what do I know?

Thank you very much for your help. Prior to October 2012 there were no lates on the account; Prior months say "OK"

I'm crossing my fingers. I'll report back once I get a response. or if I don't.

[Anonymous]

---

@lamplight2012 wrote:

NormanFH,

From my Google searches that's what I found as well, and was my basis for disputing the 'spotty' reporting. Just wanted to confirm. You'd think they'd report accurately in these cases, so it wouldn't cause them to delete the whole tradeline. But what do I know?

Thank you very much for your help. Prior to October 2012 there were no lates on the account; Prior months say "OK"

I'm crossing my fingers. I'll report back once I get a response. or if I don't.

---

One can never account for incompetance. It seems to be rampant with FP.

[RobertEG]

Lack of reporting of prior derogs is not evidence that the account was not delinquent in a reported month.

Creditors are not required to report a delinquency for each and every month when the account was delinquent, or even to report the higher level of delinquency.

The requiement is only that what is reported cannot knowingly be inaccurate.

Thus, one cannot use lack of showing in your payment history profile to reporting of a delinquency to establish that the account was not delinquent.

As for when a creditor either can or must take a charge-off, I concur with Norman.  There are federal regulatory requiremnts imposed on banks requiring that they must charge installment loans to loss at 120 days, and credit card debt to loss at 180 days.  That is to prevent misstatement of value of assets to regulators and shareholders.

However, creditors are permitted to also make determinations that a debt has become uncollectible at an earlier time.  No clear definition of when is provided.

Since bad debt can be written off with the IRS, the IRS has established regs providing guidance, and IRS determinaitons are usually the best guidance.

The most obvious example of an earlier CO is declaration of BK by the consumer, which clearly makes the debt uncollectible at that time.

For IRS discussion of other situations, see the IRS publcation:

Section 166.  Deduction for Bad Debts 26 CFR 1.166-2: Evidence of worthlessness

Rev. Rul. 2001-59

www.irs.gov/pub/irs-drop/rr-01-59.pdf

[lamplight2012]

Thanks for the response, RobertEG

I'm trying to follow you. Are you basically saying that the credit report can say the debt was 'OK' for a particular month, but actually be delinquent?

If that's the case, how would I know if the debt was legitamently charged off by the correct rules? Or does that not matter?

However, creditors are permitted to also make determinations that a debt has become uncollectible at an earlier time.  No clear definition of when is provided.

I'm curious on how & when they are able to make a determination. That seems to make the federal regulation worthless.

[RobertEG]

The federal regulations are not worthless, they are subjective.

Not all determinations are black and white.

The definition under the regs is that the debt can be considered to have become "oncollectible."

They provide examples, which is the whole point of provding the publication as guidance, but the ultimate determination is based on the reasonable interpretation of that general standard.

[Anonymous]

---

@lamplight2012 wrote:

Thanks for the response, RobertEG

I'm trying to follow you. Are you basically saying that the credit report can say the debt was 'OK' for a particular month, but actually be delinquent?

If that's the case, how would I know if the debt was legitamently charged off by the correct rules? Or does that not matter?

However, creditors are permitted to also make determinations that a debt has become uncollectible at an earlier time.  No clear definition of when is provided.

I'm curious on how & when they are able to make a determination. That seems to make the federal regulation worthless.

---

On the contrary - the purpose of that regulation is PREVENT companies from padding their book value by not charging off bad accounts. Ever hear of Enron? While it was not precisely what they were doing - the concept was the same, they were artificially inflating their value with accounting tricks.

Think of it as a speed limit - just because *some* cars are moving slower than the speed limit, does not negate the value of having that limit.