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Weird Question

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Weird Question

Just starting to rebuild after some massive medical issues wiped us out.

 

We have a bunch of 120 lates, and are moving back to NYC in 15 months.  Am I better off letting those accounts charge off so I can pay them and get them off in five years and not have to sit with the lates for 7 years?  Thoughts?

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Moderator

Re: Weird Question


@haleyjen wrote:

Just starting to rebuild after some massive medical issues wiped us out.

 

We have a bunch of 120 lates, and are moving back to NYC in 15 months.  Am I better off letting those accounts charge off so I can pay them and get them off in five years and not have to sit with the lates for 7 years?  Thoughts?


In all reality 120 lates and CO are the same for Fico purposes. If you will be in NYC in 5 years when they can be removed as paid COs then IMHO it would be your best course of action.

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Message 2 of 3
Legendary Contributor

Re: Weird Question

It will depend upon how the CRAs interpret the exclusion provisions of the NYS code.

 

Under the federal exclusion provisions of FCRA 605(a)(4) and 605(c), a  CRA will usually only exclude a charge-off after 7 years, but not the entire account, if the debt has been paid.

However, if the debt remains unpaid, and thus has a continued adverse current status which also is required to be excluded under the separate provisions of section 606(a)(5), the CRA will then exclude the entire account.

 

Under the same interpretation but applied to the earlier exclusion provisions of the NYS code, the five year exclusion provision only applies if the debt is paid, and thus the current status is no longer adverse, and thus the CRA may only exclude the CO at five years, and not the entire account or other reported montly delinqencies, which are not subject to the five year exclusion provision.

 

You are taking a chance that the CRA will only remove the CO and not the entire account or the monthly delinquencies.

I would not assume that the CRA will simply remove the entire account.......

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