topic Re: Collections in Rebuilding Your Credit

Collections

coachbeau — Fri, 23 Apr 2021 16:59:40 GMT

I have a collections that is six years old that is on my report. There was a motion filed against me on the account. I made a payment arrangement to make monthly payments on this account. My questions is, I will still be paying after the (7) years that collections fall off, will this still show on my credit file?

Re: Collections

collics — Fri, 23 Apr 2021 20:23:19 GMT

If I had to take an educated guess, my answer would be No. It would still be removed as of the month/year listed on your reports.

But I would be sure to keep paying it and not default on the pmt arrangement.

Re: Collections

gdale6 — Fri, 23 Apr 2021 20:36:31 GMT

Once it reaches the limits of time allowed in the FCRA its gone from your CRs but as already stated continue to pay it as the SOL most likely reset with new payment arrangements. You can check and see if this is true in the state you live in and the creditors home state.

Re: Collections

Anonymous — Sat, 24 Apr 2021 23:04:56 GMT

Yep that’s both correct. It should disappear (but if you default on your new payment arrangements, that could end up in a new delinquency reporting) & it did restart the SOL most likely.

Edit: Due to @vntrsc's astute & persuasive argument later in the thread, I retract the parenthetical statement above, as I am persuaded it would not be a 'new' delinquency within the meaning of the federal provisions, even if delinquent & reported on the new payment arrangements. Jmho based on the well-reasoned argument.

Re: Collections

vntrsc — Fri, 23 Apr 2021 22:10:06 GMT

@Anonymous wrote:
Yep that’s both correct. It should disappear but if you default on your new payment arrangements, that could end up in a new delinquency reporting & it did restart the SOL most likely.

I don't believe a default of the settlement would result in a new delinquency reporting. The reason is because the FCRA states that the 7-year reporting period begins 180 days after a delinquent account is placed for collection or charged off. It is the same account that was already delinquent, charged off and placed in collection. A settlement agreement doesn't change that fact.

Re: Collections

7774x — Fri, 23 Apr 2021 22:21:12 GMT

Sued after SOL passed? Ar u in a state where time limits are 6 yrs?

Re: Collections

Anonymous — Sat, 24 Apr 2021 01:49:50 GMT

@vntrsc wrote:
@Anonymous wrote:
Yep that’s both correct. It should disappear but if you default on your new payment arrangements, that could end up in a new delinquency reporting & it did restart the SOL most likely.
I don't believe a default of the settlement would result in a new delinquency reporting. The reason is because the FCRA states that the 7-year reporting period begins 180 days after a delinquent account is placed for collection or charged off. It is the same account that was already delinquent, charged off and placed in collection. A settlement agreement doesn't change that fact.

@vntrsc Let me give you a hypothetical and see what you think. If this were a third-party collection and OP engaged in negotiations and entered into a contract to satisfy the debt the CA had previously purchased, wouldn't it be a new account, between new parties, with a new terms?

this would not be a situation where a CA is re-aging a debt, but rather where the consumer voluntarily enters into a brand new agreement. No one forced consumer to enter into a new agreement. Thoughts?

Re: Collections

vntrsc — Sat, 24 Apr 2021 04:59:27 GMT

@Anonymous wrote:
@vntrsc wrote:
@Anonymous wrote:
Yep that’s both correct. It should disappear but if you default on your new payment arrangements, that could end up in a new delinquency reporting & it did restart the SOL most likely.
I don't believe a default of the settlement would result in a new delinquency reporting. The reason is because the FCRA states that the 7-year reporting period begins 180 days after a delinquent account is placed for collection or charged off. It is the same account that was already delinquent, charged off and placed in collection. A settlement agreement doesn't change that fact.
@vntrsc Let me give you a hypothetical and see what you think. If this were a third-party collection and OP engaged in negotiations and entered into a contract to satisfy the debt the CA had previously purchased, wouldn't it be a new account, between new parties, with a new terms?

this would not be a situation where a CA is re-aging a debt, but rather where the consumer voluntarily enters into a brand new agreement. No one forced consumer to enter into a new agreement. Thoughts?

I disagree that it's a new account. It's not a new account that the CA originated or the consumer can utilize. It's still the same account that previously became a collection account and was charged off. The only way an account can become delinquent is if it's current. Once it is charged off, it cannot be current again. A settlement agreement to repay a debt that was charged off is not for a current account. It is for a collection account, and 1681c(c) of the FCRA specifies "placed for collection".

While there may be terms in the settlement agreement regarding payment, the subject of the agreement is that same account that was already "placed for collection" and "charged to profit and loss".

Re: Collections

Anonymous — Sat, 24 Apr 2021 05:09:28 GMT

@vntrsc wrote:
@Anonymous wrote:
@vntrsc wrote:
@Anonymous wrote:
Yep that’s both correct. It should disappear but if you default on your new payment arrangements, that could end up in a new delinquency reporting & it did restart the SOL most likely.
I don't believe a default of the settlement would result in a new delinquency reporting. The reason is because the FCRA states that the 7-year reporting period begins 180 days after a delinquent account is placed for collection or charged off. It is the same account that was already delinquent, charged off and placed in collection. A settlement agreement doesn't change that fact.
@vntrsc Let me give you a hypothetical and see what you think. If this were a third-party collection and OP engaged in negotiations and entered into a contract to satisfy the debt the CA had previously purchased, wouldn't it be a new account, between new parties, with a new terms?

this would not be a situation where a CA is re-aging a debt, but rather where the consumer voluntarily enters into a brand new agreement. No one forced consumer to enter into a new agreement. Thoughts?
I disagree that it's a new account. It's not a new account that the CA originated or the consumer can utilize. It's still the same account that previously became a collection account and was charged off. The only way an account can become delinquent is if it's current. Once it is charged off, it cannot be current again. A settlement agreement to repay a debt that was charged off is not for a current account. It is for a collection account.

While there may be terms in the settlement agreement regarding payment, the subject of the agreement is that same charged-off, collection account.

@vntrsc you may be right, I don't know without doing the research, but I would think that the CA could originate an account for the consumer to utilize to pay the debt purchased by CA. It would start out current with a new SOL and if consumer does not comply, they are subject to a suit again.

E.g. a debt collector purchases a debt and owns it. Then a consumer could make an offer, the CA could accept, there is consideration, so I don't see why it would not be a new agreement? it starts a fresh SOL by action of the consumer.

Re: Collections

vntrsc — Sat, 24 Apr 2021 06:17:10 GMT

@Anonymous wrote:
@vntrsc wrote:
@Anonymous wrote:
@vntrsc wrote:
@Anonymous wrote:
Yep that’s both correct. It should disappear but if you default on your new payment arrangements, that could end up in a new delinquency reporting & it did restart the SOL most likely.
I don't believe a default of the settlement would result in a new delinquency reporting. The reason is because the FCRA states that the 7-year reporting period begins 180 days after a delinquent account is placed for collection or charged off. It is the same account that was already delinquent, charged off and placed in collection. A settlement agreement doesn't change that fact.
@vntrsc Let me give you a hypothetical and see what you think. If this were a third-party collection and OP engaged in negotiations and entered into a contract to satisfy the debt the CA had previously purchased, wouldn't it be a new account, between new parties, with a new terms?

this would not be a situation where a CA is re-aging a debt, but rather where the consumer voluntarily enters into a brand new agreement. No one forced consumer to enter into a new agreement. Thoughts?
I disagree that it's a new account. It's not a new account that the CA originated or the consumer can utilize. It's still the same account that previously became a collection account and was charged off. The only way an account can become delinquent is if it's current. Once it is charged off, it cannot be current again. A settlement agreement to repay a debt that was charged off is not for a current account. It is for a collection account.

While there may be terms in the settlement agreement regarding payment, the subject of the agreement is that same charged-off, collection account.
@vntrsc you may be right, I don't know without doing the research, but I would think that the CA could originate an account for the consumer to utilize to pay the debt purchased by CA. It would start out current with a new SOL and if consumer does not comply, they are subject to a suit again.

E.g. a debt collector purchases a debt and owns it. Then a consumer could make an offer, the CA could accept, there is consideration, so I don't see why it would not be a new agreement? it starts a fresh SOL by action of the consumer.

A new agreement doesn't necessarily mean a new account. While it may be a new agreement for the purpose of the SOL for collection in the consumer's state of residence and subjects him to a debt collection lawsuit, it is not a new account opened by the consumer and subject to credit reporting. It does not change the status of the account. It is still the same account was already placed for collection and charged off before it was purchased by the collection agency. The very fact that it was sold to a collection agency shows that it cannot be a current account and is already delinquent.

In the Consent Order issued by the CFPB in its lawsuits against Midland and Portfolio, one of the conditions is that the debt buyers can attempt to collect old debts as long as they disclose to consumers that the debts are too old to be reported. If settlement agreements are new accounts that can be reported, the CFPB could not have required that disclosure.

Re: Collections

Anonymous — Sat, 24 Apr 2021 06:52:05 GMT

@vntrsc wrote:
@Anonymous wrote:
@vntrsc wrote:
@Anonymous wrote:
@vntrsc wrote:
@Anonymous wrote:
Yep that’s both correct. It should disappear but if you default on your new payment arrangements, that could end up in a new delinquency reporting & it did restart the SOL most likely.
I don't believe a default of the settlement would result in a new delinquency reporting. The reason is because the FCRA states that the 7-year reporting period begins 180 days after a delinquent account is placed for collection or charged off. It is the same account that was already delinquent, charged off and placed in collection. A settlement agreement doesn't change that fact.
@vntrsc Let me give you a hypothetical and see what you think. If this were a third-party collection and OP engaged in negotiations and entered into a contract to satisfy the debt the CA had previously purchased, wouldn't it be a new account, between new parties, with a new terms?

this would not be a situation where a CA is re-aging a debt, but rather where the consumer voluntarily enters into a brand new agreement. No one forced consumer to enter into a new agreement. Thoughts?
I disagree that it's a new account. It's not a new account that the CA originated or the consumer can utilize. It's still the same account that previously became a collection account and was charged off. The only way an account can become delinquent is if it's current. Once it is charged off, it cannot be current again. A settlement agreement to repay a debt that was charged off is not for a current account. It is for a collection account.

While there may be terms in the settlement agreement regarding payment, the subject of the agreement is that same charged-off, collection account.
@vntrsc you may be right, I don't know without doing the research, but I would think that the CA could originate an account for the consumer to utilize to pay the debt purchased by CA. It would start out current with a new SOL and if consumer does not comply, they are subject to a suit again.

E.g. a debt collector purchases a debt and owns it. Then a consumer could make an offer, the CA could accept, there is consideration, so I don't see why it would not be a new agreement? it starts a fresh SOL by action of the consumer.
A new agreement doesn't necessarily mean a new account. While it may be a new agreement for the purpose of the SOL for collection in the consumer's state of residence and subjects him to a debt collection lawsuit, it is not a new account opened by the consumer and subject to credit reporting. It does not change the status of the account. It is still the same account was already placed for collection and charged off before it was purchased by the collection agency. The very fact that it was sold to a collection agency shows that it cannot be a current account and is already delinquent.

In the Consent Order issued by the CFPB in its lawsuits against Midland and Portfolio, one of the conditions is that the debt buyers can attempt to collect old debts as long as they disclose to consumers that the debts are too old to be reported. If settlement agreements are new accounts that can be reported, the CFPB could not have required that disclosure.

@vntrsc Again you may be correct, but I do not find the consent order dispositive for the following reason. Just like they would have to disclose it is too old to report, they would also be passed the SOL. However a new agreement would subject them to a new SOL, by action of the consumer.

I don't see how entering into a new debt agreement could not also have a similar effect on reporting requirements, absent contrary law. Yes it's for old debt, but it's a new debt agreement that the consumer did not have to enter into to pay off an old debt that the consumer did not have to pay off.

The consumer decided to subject themselves to a new SOL. Why could they not do the same for a new reporting period?

and I honestly don't know, just playing devils advocate, but I definitely always enjoy our discourse, you're very sharp!

Re: Collections

vntrsc — Sat, 24 Apr 2021 19:52:43 GMT

@Anonymous

State laws allow for payments and new agreements to reset or restart a collection period. The FCRA makes no such allowance for reporting a charged off account. It is the account, not the agreement, that is the subject of the reporting period.

A credit card bank can amend its terms and conditions for your credit card account. When you use the card again, you are agreeing to the amended terms. However, those new terms do not create a new account.

1681c(b) lists 3 excemptions to the reporting periods in 1681c(a). None of those exemptions include a settlement agreement for a debt.

In Slick v. Portfolio Recovery (U.S. District Court Illinois, 2014), PRA sent Slick several letters. One was a repayment plan that contained the following:

"Should you miss any of the payments described herein, this payment plan may become null and void. If you complete this payment plan and our company is reporting our company's trade line for this account to the three major credit reporting agencies, our company will report this as settled."

The debt at issue was a collection account purchased PRA and was beyond the 7-year reporting period. The court decided that PRA violated the FDCPA because the letter implied that PRA could take an action it was legally prohibited from taking.

"Accordingly, December 2, 2003, is the date on which the clock began to run, and June 3, 2011, is the date on which no information regarding Slick's debt at issue could have been listed on her credit report."

According to the court, a repayment plan made no difference in the 7-year reporting period. Other courts, as well, have ruled that debt buyers cannot report obsolete accounts. If you accept any settlement offer for an obsolete account with a debt buyer, even one with a one-time payment, that's a new agreement. However, the debt buyer cannot report the account to the CRAs. From Gonzales v. Arrow Financial (9th Circuit Court of Appeals, 2011).

"As there is no circumstance under which Arrow could legally report an obsolete debt to a credit bureau, the implication that Arrow could make a positive report in the event of payment is misleading."

The FCRA states “delinquency which immediately preceded the collection activity”. That’s the date of first delinquency that is routinely referred to on this site. The 7th Circuit Court of Appeals referred to it as the “original delinquency”.

When a debt buyer purchases an account, it is already closed, charged off, and has an original date of delinquency. No matter the agreement, it cannot change the fact that the debt buyer bought a charged-off account with an original date of delinquency, and the agreement is for repayment of a charged-off debt, not a current account.

Re: Collections

Anonymous — Sat, 24 Apr 2021 20:57:06 GMT

@vntrsc wrote:
@Anonymous

State laws allow for payments and new agreements to reset or restart a collection period. The FCRA makes no such allowance for reporting a charged off account. It is the account, not the agreement, that is the subject of the reporting period.

A credit card bank can amend its terms and conditions for your credit card account. When you use the card again, you are agreeing to the amended terms. However, those new terms do not create a new account.

1681c(b) lists 3 excemptions to the reporting periods in 1681c(a). None of those exemptions include a settlement agreement for a debt.

In Slick v. Portfolio Recovery (U.S. District Court Illinois, 2014), PRA sent Slick several letters. One was a repayment plan that contained the following:

"Should you miss any of the payments described herein, this payment plan may become null and void. If you complete this payment plan and our company is reporting our company's trade line for this account to the three major credit reporting agencies, our company will report this as settled."

The debt at issue was a collection account purchased PRA and was beyond the 7-year reporting period. The court decided that PRA violated the FDCPA because the letter implied that PRA could take an action it was legally prohibited from taking.

"Accordingly, December 2, 2003, is the date on which the clock began to run, and June 3, 2011, is the date on which no information regarding Slick's debt at issue could have been listed on her credit report."

According to the court, a repayment plan made no difference in the 7-year reporting period. Other courts, as well, have ruled that debt buyers cannot report obsolete accounts. If you accept any settlement offer for an obsolete account with a debt buyer, even one with a one-time payment, that's a new agreement. However, the debt buyer cannot report the account to the CRAs. From Gonzales v. Arrow Financial (9th Circuit Court of Appeals, 2011).

"As there is no circumstance under which Arrow could legally report an obsolete debt to a credit bureau, the implication that Arrow could make a positive report in the event of payment is misleading."

The FCRA states “delinquency which immediately preceded the collection activity”. That’s the date of first delinquency that is routinely referred to on this site. The 7th Circuit Court of Appeals referred to it as the “original delinquency”.

When a debt buyer purchases an account, it is already closed, charged off, and has an original date of delinquency. No matter the agreement, it cannot change the fact that the debt buyer bought a charged-off account with an original date of delinquency, and the agreement is for repayment of a charged-off debt, not a current account.

@vntrsc well reasoned. i'm persuaded.

Re: Collections

Demented1 — Sun, 25 Apr 2021 01:19:20 GMT

I believe the bigger question @coachbeau is what is the OA cost of the motion ($xxxx.xx) and what is your obligation to the payment arrangement? If there is a delta as you imply “I will still be paying after the (7) years that collections fall off,…”. Either you have an immense charge against you, or the mediator, arbitrator or litigator set the collection payoff payments conducive to your annual income. Additional DP’s would be required to logically answer your question. The hypotheses presented thus far are speculative based off the information you have provided.

The forum/community can set you on the right track with the proper detailed information. I would query or solicit the senior members on this subject.

Re: Collections

vntrsc — Sun, 25 Apr 2021 02:07:03 GMT

@Anonymous

I was thinking we might have to respectfully agree to disagree. 😀 I understand your reasoning and feel we had a good discussion.

Re: Collections

Anonymous — Sun, 25 Apr 2021 04:55:19 GMT

@vntrsc wrote:
@Anonymous

I was thinking we might have to respectfully agree to disagree. 😀 I understand your reasoning and feel we had a good discussion.

@vntrsc sometimes we do have to, and likewise, I also always understand your reasoning and we always have a great discussion because you're very bright and articulate. I am impressed and I don't impress easily!