Any way to stop a delinquent payment from being reported?

[Anonymous]

My girlfriend recently discovered her mortgage payment was 42 days late. She learned this by receiving a phone call from a collection agency, so I’m assuming that implies a 30+ day delinquency has been reported to the credit bureaus, and this ding will now be stuck on her credit history for 7 years. Not good! My questions are going to be: since a collection agency is involved, does this automatically imply the delinquency has been reported to the credit bureau?
If so, is there any way to get it removed?

Quick background: she’s never had a late payment in over four years. What happened was, she recently switched jobs and opened a new bank account. All her new paychecks were being direct deposited to her new account. Meanwhile, her old account, which her mortgage payments were being auto-debited from, was no longer being funded, and eventually depleted to where it couldn’t make the payment. Major lapse on her part, no question, but an honest mistake. Which leads me to back to my original questions.

1) Does the fact that a collection agency contacted her automatically imply the 30+ delinquent has been reported to the credit bureaus?

2) If so, is there anyway to get it removed? Could she call her bank? Given the background I provided, since she’s never had a late payment before, and since her switching her auto-debit to a new bank account should provide fairly concrete evidence to support she’s not just BS’ing them, I’m optimistic the bank would cut her a break and do whatever they could on their end to remove the delinquency (IF it’s possible).

So my “#2” question is really where I hope someone here can provide the most guidance. Assuming #1’s answer is “yes, it’s been it reported”, then basically, what advice can you provide on how to get this delinquency removed. Is there anything her bank can do? I’m going to call them with her, but wanted to get advice from the experts on here first.

Thanks in advance for any advice you folks can offer!

[Anonymous]

Obviously, first thing to do is get the loan current. Which I'm sure she probably already has.
Then she can ask for an adjustment to the credit reporting, but more than likely she will be told they have to report it accurately to the CRAs.
Just keep asking and emphasize her great payment history with them and others. Most companies ( but not all) will give in and do a one time update for you. Especially after she has made several more on time payments.
It may take many many calls, letters, and emails but hopefully she eventually gets her message to the right person.

[Anonymous]

Thanks for the advice. I’ve also been reading about Goodwill Adjustment letters. I think we’ll write a letter explaining the request, in addition to the phone calls as well. She has over 4 years of on-time payments, so I’m optimistic they’ll work with us, at some point.

[RobertEG]

No, it does not mean that it will automatically be reported to the CRAs.

Credit reporting is voluntary, and a creditor can choose not to report a delinquency, and/or can choose to delay first reporting of a delinquency statuts until the delinquency level has reached a certain amount, such as 60-late.

Additionally, some creditors do not even have a reporting agreement with some or any CRAs, and thus cannot report, period.

Similarly, not all debt collectors report to CRAs, and even if they do, some will delay reporting of their collection for a month or two in order to provide a short period for payment of the debt without the need to then consider any pay for deletions.  CRA policy instructs both creditors and debt collectors not to delete after reporting based on consumer payment of the debt.

I would begin by sending the debt collector a debt validation (DV) letter, which imposes a temporary cease collection bar on them which remains in effect until they have first sent the requested debt validation.  The cease collection bar has generally been interpreted by the courts as extending to any reporting of their collection until the cease collection bar is lifted by their sending of validation.  That will provide a temporary reprieve from reporting of a collection.

I would then contact the creditor and determine if they still own the debt.  If they do, I would offer to pay them the debt in exchange for their agreement to first terminate the assigned collection authority to the debt collector, and to also agree not to report any delinquencies to the CRAs.

[pipeguy]

I would be surprised if a mortgage loan that is "only" 42 days late would be turned over to an outside collection agency. I suspect that an in-house effort is underway and that could be through a contacted collection/debt service. As a rule, mortgage holders do NOT want mortgages to default or go to foreclosure sale - it's complicated and they typically take a loss. In my experience, the first "call" is typically  30 days after a missed payment (about 45 days counting the grace period) which fits your case.

Assuming that the account has been caught up and is current, and understanding that a payment 42 days late is YOUR fault (the mortgage holder) since it's never good to assume payments are made as scheduled (I always double check my payments, always), I would call the mortgage servicer and plead my case - offer proof that they pulled from the wrong account or just explain why it happened aka not a lack of funds. Many lenders will give you a one-shot goodwill "no-report" if you have a sterling history with them but they don't have to.

[Anonymous]

Thank you RobertEg and Pipeguy.

I failed to mention the fact that her new bank account is also her lender- TD Bank. So I’m optimistic that may play into our favor in terms of gaining sympathy, since we can mention being “loyal customers” when pleading our case.

As of now, our plan is to contact the bank tomorrow and respectfully plead our case; acknowledge it is our error, but show her history of on time payments, and her current bank account (with TD) having more than adequate funding. In doing so, I’m hopeful if in fact it has not yet been reported, as pipeguy believes may be possible, they may cut us a break over the phone.

Also, you (pipeguy) may be right about the “collection agency”. She said she thought the person who called about the payment said they were from a collection agency, but she isn’t sure. So it’s very possible it was an “in-house” collector.

Thanks for all the advice so far. I’ll report back the outcome of the phone call.

[Anonymous]

We called last week and were notified by the customer service rep that they were obligated report the delinquency to the credit bureaus, so we're currently drafting a goodwill letter.

My current question is in regards to the timing of the letter. Should we send it immediately or wait a couple months after demonstrating we're able to make timely payments again?

In the below linked article, at the very bottom, the author states:

"You’re also more likely to have the delinquency removed if it happened a while ago. That’s because you’ve had time to prove that it was just a one-time occurrence rather than an ongoing financial issue."

https://aaacreditguide.com/goodwill-letters/

Waiting a couple months to show you're "back on track" makes sense to me, but conversely, we planned to provide a few bank statements for the periods before, during, and after the delinquency to demonstrate her account was amply funded to reassure them it won't be an on-going issue.

Any thoughts are greatly appreciated.

Thanks,