I have an item in collections and i don't know the best way to handle it - help appreciated

[Anonymous]

Please see attached photo.

What is the best way to handle this item in collections?

Here's my dillemna 

1) I've heard about the 7 years rule, and how sometimes it's best to just let an item fall off instead of paying it and potentially restarting the 7 years. How true is this?

2) If I contact the collections agency and talk to them about this debt, will it reset the time?

3) This item is still listed as "open", does the 7 year rule still apply to items that are "open"?

4) What is the best recommendation on proceeding forward with this?

THANK YOU!

[kilroy8]

What is the statute of limitations (SOL) in your state?

That's a lot of money, if you are beyond SOL, leave it alone.

[Anonymous]

Maryland - so 3 years.

So should it fall off in 2020?

Thanks!

[Anonymous]

What is the date of first default? 🤔

[Anonymous]

I do not know - where could I find that information?

[Anonymous]

The date that you first defaulted. That's when the click started.

[Anonymous]

I only see Open Date on Credit Karma and on Experian ... do you know which website would show me the defaulted date? Also, what is the significance of the defaulted date?

[Caardvark]

The date you are looking for is the Date of First Deliquency (DOFD). It will not be on Credit Karma. Have you ever (in the last 5-6 years) gotten your credit report from annualcreditreport.com? If so, it will be there. If you haven't, it would be a good time to get it. You can get one report, each year, from each bureau, for free. It does not have scores but it is very comprehensive.

The DOFD is typically 30 days after your last payment to them. More specifically, the first 30-day late in the chain that led to default (30 day late, 60 day late, 90 day late, 120 day late, 150 day late, 180 day late, Charge Off). 

It should come off your report 7 years from the DOFD. However, there is also something called Early Exclusion where each credit bureau will remove items a few months before the 7 years. Someone else can chime in with the specifics but I believe TransUnion will remove them 6 months early, Experian 3 months early, and Equifax 1 month early. When eligible you'd need to request it from each bureau. 

You are certainly within your rights to ignore it until EE eligible and have it removed but bear in mind they are still within their rights to try and collect. You still owe the debt. The owner just has very little recourse to make you pay (can't sue, can't put it on credit report, etc). So... you may still receive phone calls and/or letters to resolve. 

On a related note, if you need to have them removed before they will come off either naturally or through EE, you are in a very good position to negotiate a significant discount. (For example, if you wanted to buy a house in the next few months, any mortgage lender is going to mandate all collections are resolved.) You could reach out and offer a token amount of money in exchange for a PFD. This approach would discharge the debt and remove from your report. If they say yes, great! If not, simply wait out the remaining months. 

Lastly, if you do speak to the creditor to offer a PFD, they key to not risk restarting the SOL is to NOT acknoweledge debt is yours. This can easily be done by saying something like, "I'm not acknowledging the debt but for the sake of expediency in removing it from my report, I'm willing to make an offer to have it removed." That's it.

Good Luck

[RobertEG]

There is no such thing as a reset of the credit report exclusion period for a collection, which is set by statute as being no later than 7 years plus 180 days from the date of first delinquency (DOFD).  See FCRA 605(c).

That is true regardless of whether the debt is paid, remains unpaid, when the collection is reported, or any other date.

The issue of a reset of the exclusion date of a collection was clarified back in 1997 when congress amended the FCRA by addition of new sections 605(c) and 623(a)(5).  Prior to that time, the exclusion period for a colleciton or charge-off was ambiguous, and the CRA generally interpreted the exclusion period as being based on dates other than one date certain, and reset the exclusion period based on a variable "date of collection."   Any articles you read that reference any reset of the exclusion period of a collection are based on a very old interpretation of the statute, which has since clearly been clarified.

The debt collector is specifically required under section 623(a)(5) to separately report the DOFD to the CRA no later than 90 days after reporting their collection, so it will be in your credit file.  As stated in prior responses, some commercial credit reports choose not to show the DOFD, but it must be in your file. 

Reports obtained via annualcreditreport.com or directly from a CRA will usually show the reported DOFD.

[DIYcredit]

When you receive the credit report from anualcreditreport.com if their is no dofd than it should have the date it will be deleted from that credit report.