I know there has been a lot of discussion about this topic on boards and it is almost impossible to find any concrete information about specifics anywhere, but I wanted to see if anyone can provide any detailed information in writing from a legal source that responds to the following:
Without sounding arrogant, let me just start by saying that I work with the credit bureuas on a daily basis as part of my job and all of the below information I know to be 100% fact from documentation, conversations and laws. There are just some sticking points that I would love to be able to find legal documentation for that I can provide to Experian. If anyone can refer me to that I would be greatly appreciative.
The New York State Purge Rule says that Collection and Charge Off accounts that are paid only remain on the credit report for five year. However, in the actual New York State law (380 j(f)(1)(iv) the phrasing is very vague and clearly open to interpretation and Experian chooses to interpret everything in the most unfriendly way possible against the consumer.
Equifax and Trans Union abide by this law and interpret it as any Collection/Charge Off account that is Paid (even if it is settled for less) will be removed from your credit report five years from the original date of delinquency. And that includes all accounts associated with the same debt, so if you have a Cap One account that gets charged off and sold to NCO Fin, then you pay NCO, five years from the original date of delinquency with Cap One, both accounts will come off your report.
Experian, the devil themself, interprets all of this differently. They claim that the account must be PAID IN FULL, not settled for less, even though there is nothing in the law that states that. It just says paid, which means anything that is settled but the definition of the word. There are only two classifications on a debt, paid or unpaid. If something is settled for less, it is still PAID in the sense that you no longer owe any money, which is supposed to be the intent of the law. Experian also interprets this law as running five years from the "derogatory date" which they interpret as the date the account was charged off or sent to collections, not the original date of delinquency, which from what I can tell is them taking an advantage of a loophole that was not updated with the New York State law that was amended with the FCRA in 2003 to more clearly classify what a DOLA is. Experian will use the date of first delinquency for the 7 year Federal rule, but not for the New York State Purge Rule. Also, Experian will only remove the account that you actually paid on, so in the above scenario, they will remove the NCO account, but not the Cap One account, because Cap One was never paid, even though you had no way of paying them once it was sold and can only pay the debt once. Again, this is not the spirit in which the law was intended. I have spent hours on the phone with Experian and spoken with people in the Executive Office who have confirmed for me that it is in fact five years from the date of original delinquency and that both the original and any subsequent collection accounts should come off. I have also gotten accounts removed that were settled through arguing with Executive Customer service, but never gotten an acknowledgement that that is the law. They just do whatever they want over there and I don't understand how.
Anyway, sorry for rambling on, I'm sure most people will not even read all of this, but the bottom line is I am hoping that someone can please refer me to some section of the FCRA or NYS law that more clearly defines A) Whether this rule runs from the original date of delinquency or the charge off date B) Whether it applies to accounts settled for less as well as those paid in full and C) Whether it applies to all accounts affiliated with the same balance or only the one that was actually paid directly. I know the answers to all three of those questions already because Equifax and Trans Union both apply the law in all manners listed above, I just need something in writing to shove in Experian's face or else I will look into a class action lawsuit.
Here a link to a recent discussion on this topic:
Ex may not consider reporting items settled for less as a violation of the law. The intent may have been good but ultimately, I still feel the law could have been written in a more thoughtful manner.
It don't know if it's a little unreasonable expecting consumers to know all their rights before agreeing to pay. I also find it silly that they didn't address late payments in some way to offset shortening the reporting times of Judgments/COs.
The paid tax lien thing is tough too. It reports as a lien but is enforced/satisfied as a judgment. I think people would address them sooner knowing the law.
The answers to most of the legal questions as they relate to the federal FCRA can be found in the legislative history behind the addition of section 605(c), and the corresponding addition of section 623(a)(5), which defines what DOFD is.
The NYS version of exclusion of collections and charge-offs parallels that of the original language of FCRA 605(a)(4), ambiguously defining the 7 year period as running from the date the account was "placed for collection or charged to profit and loss." Section 605(c) further defined the period as "beginning on the date of commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, of similar action.' The legislative history makes it clear that this defines a single, date-certain, which is the commencement (first) of delinquencies in the chain of delinquencies which immediately preceded the collection or charge-off.
The fact that use of DOFD is not inconsistent with the old language of FCRA 605(a)(4) is evident by the way the FCRA was actually amended. The prior, ambiguous section 605(a)(4) was not deleted, new section 605(c) was added. This lead to the contorted language of section 605(c), which actually defines the 7 year date as not running from DOFD, but rather as running from 180 days after DOFD. However, by retaining old section 605(a)(4), it provides one the opportunity to argue that use of DOFD is not inconsistent with the old language, including that of the NYS statute.
The fed FCRA thus removes the actual date of collection referral or charge-off from the calculation, making it the event that triggers the action, rather than the date for calculation of the action. I dont think there is any dispute over the running of the exclusion date under the FCRA, so the legal postion that would be taken in challenge of interpretation of the NYS statute would be that it must somehow be interpreted in view of the amendment to the FCRA.
I have not fully researched NYS appellant decisions, but if one could be found that specifically addresses that issue, it would be binding precedent. I would thus begin by researching NYS appellate decisions.
Thank you to everyone for your responses, I really appreciate it.
RobertEG, a special thanks to you, that was exactly the kind of legal specific explanation that I was looking for, and I think your suggestion of searching for appellate decisions is probably the best way to proceed from this point. I appreciate it!