Debt collection limits

[Anonymous]

Aside SOL, when a CA sells a debt to a debt buyer, does this restart the 7 year reporting clock? Or is this held to the original DoFD? And can anyone provide the official FCRA standard to which this applies?

[vntrsc]

The 7-year reporting period will not restart when a charged-off account is sold to a debt buyer.  The period is calculated from the DOFD provided by the original creditor. 

15 U.S. Code § 1681c(c)

(c) Running of reporting period

(1) In general

The 7-year period referred to in paragraphs (4) and (6) of subsection (a) shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.

[RobertEG]

As codied under the Fair Credit Reporting Act terminology, 15 USC 1681c(c) is codified as FCRA 605(c) 

This section was added to the FCRA specifically to clarify, once and for all, that there is no reset of running of the exclusion period based on when a debt collector obtained collection authority.

Prior to amendment of the FCRA by the additon of section 605(c), the CRAs interpreted subsection 605(a)(4) as basing the exclusion period on the date a debt collector obtained collection authority,and thus there was reset of the exclusion period when a new debt collector obtained collection authority.

It clarified that the exclusion period is based only on one date-certain, which is what is commonly referred to as the date of first delinquency (DOFD).

At the same time that new subsection 605(c) was provided, the FCRA was also amended by the addition of subsection 623(a)(5), which requires a debt collector to obtain and report the DOFD to the CRA no later than 90 days after the debt collector reports their collection to the CRA.  The CRA then uses that reported DOFD to determine the exclusion date.