Charged off account reopened after dispute

[Anonymous]

In 2014 I voluntarily surrendered a vehicle that I had been financing through Santander for five years. Santander had been reporting this as a charge off on my credit report until May of this year when I decided to actively work towards increasing my credit score. I disputed everything on my report, including Santander, because it was showing "repossession" instead of "voluntary repossession". As a result of my dispute, Santander reopened my account and sold it to a collection agency, and is now reporting as 120 days past due for the last few months. Prior to this, I had managed to increase my credit score over 100 points in 3 months. The reopening of this account single handedly dropped my score nearly 60 points. I imagine they will continue to report late each month which will do more harm to my score than all of the positive things I'm doing to increase my score. Is this legal? How do I get around this? I can't possibly pay the $436 payment I had on that repo'd car every month, in addition to my current car payment.

[Anonymous]

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@Anonymous wrote:
In 2014 I voluntarily surrendered a vehicle that I had been financing through Santander for five years. Santander had been reporting this as a charge off on my credit report until May of this year when I decided to actively work towards increasing my credit score. I disputed everything on my report, including Santander, because it was showing "repossession" instead of "voluntary repossession". As a result of my dispute, Santander reopened my account and sold it to a collection agency, and is now reporting as 120 days past due for the last few months. Prior to this, I had managed to increase my credit score over 100 points in 3 months. The reopening of this account single handedly dropped my score nearly 60 points. I imagine they will continue to report late each month which will do more harm to my score than all of the positive things I'm doing to increase my score. Is this legal? How do I get around this? I can't possibly pay the $436 payment I had on that repo'd car every month, in addition to my current car payment.

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Welcome to the forums.

Sorry that the dispute did not produce more favorable results.  I've had several late payments with Santander on 2 of my 3 reports.  I made the decision not to dispute the accuracy of the lates because it was my fear that if I did, Santander would go back and review my records and find that I had more lates than reported as I was having financial problems during that time and recognized that I could have more than they listed.  If the account has been sold, then it shouldn't continue to update as being late, but as a CO.  However, the late payments listed will continue to stay on your report.  Was the score drop on your FICO scores or from Vantage scores? 

[RobertEG]

Reopening likely was not even an issue.

A creditor can continue to report delinquencies on an account that is either open or closed.

The categorization of an account as open or closed is really only significant for revolving credit, where "closing" formally terminates ability of the consumer to make additional charges on the account.  An installment loan does not permit the consumer to add additional charges/debt, and thus "closing" usually applies only to calling a delinquent loan due.

However, it the creditor sold the debt to a debt collector, then reporting of monthly delinquencies is not possible.

Debt collectors dont have an account agreement with a consumer, dont send billing statements, and dont report monthly delinquencies.

Are you sure that the debt was sold, and that the monthly delinquencies are reporting under the debt collector's reported collection, and not the OC account?

[Anonymous]

Thank you for your reply. As I'm brand new to this world of credit and rebuilding, I don't know the specifics. All I know is that my credit report which I printed in May shows the Santander account closed as of Dec 2014 with payment status of "Charge-Off", and "Times 30/60/90 Days Late" as "0/0/0".  A few weeks after the dispute, I received a letter from Santander stating that they sold my contract to Cascade Receivables Management. Shortly thereafter, I received a notification from Credit Karma that my TU report was showing a score drop (nearly 60 points). When I logged on, it showed an increase in debt which equaled the $10k owed to Santander with a monthly increase in payments equal to my Santander monthly loan payment ($436). It also showed that I was 90 days late for the months of May and June. Ironically, I logged back on to Credit Karma today and now see that the $10k debt and monthly loan payment amount are gone from my actual monthly expenses, but my closed date is now June 30, 2017 (the same date in which the letter was written from Santander indicating that my account was sold). The "Times 30/60/90 Days Late" is saying "3/1/0"... But the damage is done, my score dropped significantly. And I'm so scared to contact Cascade because I don't know what the effect of that will be.  A mortgage lender pulled my credit report yesterday and gave me a detailed report of what was hurting me. Number one on the list was this Santander account, "A payment status of 30 days late (or worse) was reported one month ago...your score can get better over time, as long as no other late payments are added to your credit report...For seriously negative payment statuses (such as charged-off), what matters is the date the account originally reached this status". So it appears that I have a new date of 6/30/2017 and not the 12/2014 date I had been working diligently to overcome since I obtained credit cards and have been paying faithfully on for the last 2 years!  Any guidance would be greatly appreciated!

[SarahJo]

What this sounds like to me is the "re-aging" of that particular account.  9 times out of 10 the re-aging is illegal, and a tactic employed by collection agencies to pressure the consumer into repaying an old debt with the threat of that debt remaining on the credit report longer than it originally would have...and in your case affection your scores as a more current debt instead of one that has aged.  I have had this happen personally and a simple dispute with the credit bureaus with the reason of "Re-aging is ILLEGAL!," had that particluar account dropped and cleared soon thereafter.  There are legal means of re-aging, but it has to do with the ORIGINAL creditor deciding you can pay the debt (recent payments, consumer willingness and ability...doesn't sound like that applies to you) and re-aging, NOT a collection agency.  If worse comes to worse you can file a claim with the FTC due to illegal re-aging of that particular account.  Though I could be mistaken as I am unfamiliar with the process of a voluntary repo, but this seems to be the norm. 

[RobertEG]

Did the creditor still own the delinquent debt for the months they reported delinquencies?

The debt remains delinquent, so is increasing in age.  Reporting of continued delinquency is not improper "re-aging."

Improper re-aging normally refers to improper reporting of an inaccurate DOFD in order to extend the credit report exclusion date of a collection or charge to profit and loss.

[Anonymous]

SaraJo, thanks for your response. After writing everything down in this thread last night, I realized that the re-aging you described is exactly what happened. In fact, my Credit Sesame account breaks this down perfectly on a bar graph showing my auto loan balances for June as $18k (my current vehicle), July shows $30,872 (combination of both vehicles), and August is back to $18k. My TU credit report that I pulled last night shows the Santander auto loan having a zero balance, for which a payment in full was made in July (I'm assuming because it transferred to the CA). But there is no collection account on my credit report listed as of yet. I know this is going to be their next move which is going to severely affect my credit score even more. Interestingly, my score is down another 9 points today. EVERY ONE OF THE COLLECTION REPORTS I DISPUTED (4 of them) are now showing DATE OPENED in June and July of 2017. Every one of them dates back several years. This really infuriates me!! Ok, perhaps I'll post a new thread for specific guidance regarding the re-aging, surely this must have happened to the majority of people trying to reestablish their credit. SaraJo, once your re-aging dispute was overturned, was your score adjusted back to what it was prior to the big hit you took for the re-aging? 

[Anonymous]

RobertEG, when I first made the dispute in May of this year, the creditor still owned the delinquent debt which they charged off in 2014. The dispute must have "woken a sleeping giant", because I then received a letter that they transferred the account to a CA on 6/30/17. However, I now have a new charge off date of 6/30/17 and a reporting of a new delinquency, in addition to recent missed payments of 90+ days in May and June. Where I had been getting steady credit limit increases on my Capital One card because of great payment history for the last two years, they now denied this most recent request because of a new delinquency reported and a report of recent missed payments. All o the items I disputed have new charge off dates!!

[cjane1]

My Santander repo was sold to Cascade and they had a law firm handle the collection, for 3 1/2 years I received only 1 letter for the collection. When it got closer to the 4 year mark I started receiving 2 letters a month and calls. The firm has been know to sue so I made a settlement with them for 1/2 of what I owed and set up a payment arrangement.. Santander is still reporting and is expected since they didn't receive any of the money but Cascade did remove it when I paid it off.  Santander will be on my report for another 2 1/2yrs and my score is in the high 600's. I have been approved for Chase, Capitol One, Discover,and Walmart Mastercard and giving credit increases without asking but I make sure they are paid on time.

[Anonymous]

Thanks for your reply cjane1. Since my initial charge off in 2014, I was in the process of somewhat reestablishing myself. I have several unsecured credit cards which i got in 2015 and an auto loan which I got at a decent rate in April of this year, all of which I've been paying diligently on without any lates. I was making slow and steady progress towards a high score when this most recent event happened. I was under the impression that the more time that goes by on a charge off, the less damaging it is, as long as everything else has been paid on time. Now I have a brand new charge off date and new recent missed payments. So it appears that I went from fiscal responsibility to financial recklessness. My credit cards were giving me steady credit limit increases, now I'm getting denied due to recent negative activity. I acknowledge the fact that I have a debt, and I'm not trying to get out of paying my debt, but it's honestly wrong that me working towards getting back on track is negatively and significantly affecting my score.