How does DoFD actually work?

nycfico · ‎09-02-2015

As much as I've educated myself on rebuilding, and I'm now up to 640 to 650 range...I'm still confused as to how long it takes for baddies to fall off.

Suppose I stopped paying on a card in June of 2010. It went 30 days late in July, 60 days late in August, 90 days late in October, 120 days late in November. It charged off in December of 2010 with a balance of $5,000. In December of 2011, I pay the balance off.

I read and hear conflicting things as to what happens when I paid the balance. Some say the date of first default, which is July of 2010, is when the 7 year clock starts ticking to having it fall off my report. Others say that when I paid off the charge off in December of 2011, I effectively restarted the clock.

So those saying the dofd in July of 2010 is when it starts would say that in July of 2017 it will fall off. But if I restarted the clock, then December of 2018 it would fall off.

I'm really confused by this as it seems there is a lot of conflicting information out there. Help!

Anonymous · ‎09-02-2015

I would like to know this also!

Anonymous · ‎09-02-2015

Nothing resets the DoFD reporting clock. NOTHING.

nycfico · ‎09-02-2015

@Anonymous wrote:
Nothing resets the DoFD reporting clock. NOTHING.

So then why do we hear that paying off a charged off account actually can hurt your score by 'resetting' the clock?

and what about this scenario....I have a charged off account from six years ago that I'm making minimal payments to each month. I still have a balance of about $10k, and am paynig just $30 a month towards. The seven year window will pass on that in about a year and it will be off my reports, even if I am paying towards it each month? Doesn't seem like that would work..

Anonymous · ‎09-02-2015

@nycfico wrote:
@Anonymous wrote:
Nothing resets the DoFD reporting clock. NOTHING.
So then why do we hear that paying off a charged off account actually can hurt your score by 'resetting' the clock?

and what about this scenario....I have a charged off account from six years ago that I'm making minimal payments to each month. I still have a balance of about $10k, and am paynig just $30 a month towards. The seven year window will pass on that in about a year and it will be off my reports, even if I am paying towards it each month? Doesn't seem like that would work..

It does not "reset the clock". It just freshens the "reported" date (if its not being updated regularly by the CA) which is *believed* by many to make FICO see it as "new" with regards to its score impact. This negative score impact is usually short lived, as paid items no longer update and FICO begins to "see" its true age and score it accordingly. None if this has any effect on when the item becomes excluded from your reports.

Yes, your charged off account will drop from your reports even though you are making payments on it. Be aware though that should you stop making those payment, it would be a new SOL and you could be sued for the balance, even though it could not be put back on your reports.

RobertEG · ‎09-02-2015

Two events, and two events only, define the DOFD.

An account must have a first delinquency, and therafter remain delinquent up to the point where the account is either charged-off or placed for collection.

The date of the first delinquency in that chain of delinquency defines a date-certain DOFD that is not reset by any other event.

The CRA must then cease inclusion of any reported charge-off or collection on that debt no later than 7 years plus 180 days from that date-certain DOFD.

Credit report exclusion must occur regardless of whether no payments have been made, the debt has been paid, or the debt remains under a payment plan.

Payment or lack of repayment is immaterial to credti report exclusion of a reported charge-off or collection.

Anonymous · ‎09-02-2015

@nycfico wrote:
@Anonymous wrote:
Nothing resets the DoFD reporting clock. NOTHING.
So then why do we hear that paying off a charged off account actually can hurt your score by 'resetting' the clock?

and what about this scenario....I have a charged off account from six years ago that I'm making minimal payments to each month. I still have a balance of about $10k, and am paynig just $30 a month towards. The seven year window will pass on that in about a year and it will be off my reports, even if I am paying towards it each month? Doesn't seem like that would work..

I would suggest that after its off your reports, contact them and see if they will take a lump sum settlement amount. But do not stop making those agreed on payments whatever you do.

nycfico · ‎09-02-2015

@Anonymous wrote:
@nycfico wrote:
@Anonymous wrote:
Nothing resets the DoFD reporting clock. NOTHING.
So then why do we hear that paying off a charged off account actually can hurt your score by 'resetting' the clock?

and what about this scenario....I have a charged off account from six years ago that I'm making minimal payments to each month. I still have a balance of about $10k, and am paynig just $30 a month towards. The seven year window will pass on that in about a year and it will be off my reports, even if I am paying towards it each month? Doesn't seem like that would work..
I would suggest that after its off your reports, contact them and see if they will take a lump sum settlement amount. But do not stop making those agreed on payments whatever you do.

Yeah, as a matter of principle, I don't like to stiff creditors when I can help it. In fact, I'd be in better shape today had I just declared bankruptcy five or so years ago but I just don't think that's the right way to do things. So even if I was in the clear, I still want to either negotiate a settlement that they are good with or just keep chipping away at it through small payments each month.

Anonymous · ‎09-02-2015

When they say 'dont miss payments after you start a payment arrangement', I think they are trying to emphasize something like this scenario:

You have a CO with a DoFD of 1/1/2010 (rolloff 1/2017) that a CA is trying to collect on. It is for 5k. They agree to let you settle for 1k, with 10 payments of 100 each starting 7/1/2015.

You make the first 9 payments on time and then stop, paying 90% of the settlement amount.

Since you broke the settlement arrangement, it is no longer in force. You owe the full amount again, not the 100 or even the 1k. You also get the SOL clock reset to when you defaulted on the settlement agreement (3/2016) new rolloff (3/2023). I think they do have to honor that you paid 900, which is the only break you will get from this, so you will owe 4.1k.

So if you agree to a payment plan on a settlement, make it a very high priority to finish it on time.

HTH

Anonymous · ‎09-02-2015

@Anonymous wrote:
When they say 'dont miss payments after you start a payment arrangement', I think they are trying to emphasize something like this scenario:

You have a CO with a DoFD of 1/1/2010 (rolloff 1/2017) that a CA is trying to collect on. It is for 5k. They agree to let you settle for 1k, with 10 payments of 100 each starting 7/1/2015.

You make the first 9 payments on time and then stop, paying 90% of the settlement amount.

Since you broke the settlement arrangement, it is no longer in force. You owe the full amount again, not the 100 or even the 1k. You also get the SOL clock reset to when you defaulted on the settlement agreement (3/2016) new rolloff (3/2023). I think they do have to honor that you paid 900, which is the only break you will get from this, so you will owe 4.1k.

So if you agree to a payment plan on a settlement, make it a very high priority to finish it on time.

HTH

To make it PERFECTLY clear - the "SOL clock" is ONLY in regards to being sued for the debt. It has NO BEARING on the reporting time limit.