@Anonymous wrote:
I've been in a state of rebuilding my credit for the past couple of years and I had credit card debt with USAA that was forgiven last year. I received the 1099-C and have taken the appropriate actions as far the tax aspect goes, but I was reading something about the 7 year clock being reset to the date the forgiveness took place. Is this true? I was so close to having saved up enough to pay off the debt within 2014 and if this remains on my report for another 7 years I'm going to be hurting score-wise as I'm told debt forgiveness is about as bad as a bankruptcy.
No. Not true. First off...that 7-7.5 year clock is the Credit Reporting Time Period (CRTP). The clock starts at the date of first delinquency (DOFD) of a debt .This is the date you first went late and never ever brought the account current again. By law under the Fair Credit Reporting Act, a charge-off or collection can only report for 7 to 7.5 yrs from the DOFD of that debt. Nothing can reset that DOFD date. It doesn't matter if they forgave the debt, sold the debt, paid on the debt, sued for that debt, etc., that account cannot report as a negative for longer than 7-7.5 yrs.
If they sold the debt or reported to $0 and forgave it, it'll report as a paid charge-off. Charge-offs are scored similarly to other baddies like major lates or collections. There's damage from that, but it'll slowly diminish over time with quite a bit of damage remaining when it deletes at 7 yrs.
If you pull your credit report directly from annualcreditreport.com, you can see your DOFD listed on your EQ report. EX and TU won't list DOFD, but if you pull your reports through there too you'll see an estimated drop off date.
Date of Activity (or date of last activity - DOLA) is separate and unrelated to DOFD. Anything like a dispute or payment can reset the DOLA date, but that date has nothing to do with the length of reporting. I wouldn't worry about that date.
