placed for collections question

[Downto0]

Here is the section of the fcra my question stems from:

605(c) Running of Reporting Period

(1) In general. The 7-year period referred to in paragraphs (4) and (6) 3 of subsection(a) shall begin, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier),

It goes on to include charge offs and other similar actions which could trigger the requirement but the OC, in my case, initiated collections before any other adverse action.

So, my question is, since the 7 1/2 period was triggered by my account being placed for collections, shouldn't that date remain the same even if the account is sold or transferred to a third party debt buyer?

[Anonymous]

Yes, this is the reported "Date of First Delinquency". Your full credit file (from annualcreditreport.com) should show this date as either the DoFD or Drop-off date. And it should NEVER change.

[RobertEG]

+1

Placed for collection is the triggering event... you have a delinquent debt that has been placed for collection. However, that is not the date upon which credit report exclusion is based.

When that collection activity has occured, the relevant date then becomes the date of commencement of the delinquency that immediately preceded the collection activity.

That date (commonly referred to as the DOFD) is the one that sets the running of the 7 year plus 180 day period, not the date the delinquent account was placed for collection.

The entire purpose of adding section 605(c) was to clarify that the date of referral or date of collection authority by a debt collector is NOT the date for setting the running of the exclusion period, it is the prior date when the delinquency that led up to the collection occured.  That is a fixed, date-certain that cannot change.

In distinction, termination of one collection referral and the begin of authority by a new debt collector does set a new placed for collection date, but that does not alter the DOFD, and thus does not alter the credit report exclusion date.

Section 623(a)(5) was added at the same time that section 605(c) was added, and defines how the DOFD is to be obtained and reported to the CRA.

[Downto0]

I have a debt buyer who has bought the OC's account and is listing the "placed in collection" as a date 4 1/2 years later than the OC's.  Understandably, the debt buyer is stating that this is the date that "we" placed "our" account in collections.  

However, since the purge date depents on when the account was placed in collections, prospective lenders could easily read the current date of collections as a new collection account.  Old stale debts don't draw much attentions on a credit report - especially if the debtor has since picked up new accounts and is paying as agreed. Conversely, debts recently placed for collections do.  

So, is it okay for a debt buyer to list a current date placed in collections which is 4 1/2 years later than the OC?

[RobertEG]

The entire reason that section 605(c) was added to the FCRA back in 1997 was to clarify, once and for all, the issue of the exclusion period.

The original FCRA had the problem you reference.... it pegged the running of the 7 year period from the date the account was "placed for collection.""

See FCRA 605(a)(4).

Thus, both debt collectors and the CRAs were resetting the 7 year period whenever a new collection was placed.  The result was the possible extension of credit report exclusion forever.

Section 605(c) was addred by congress to clarify, once and for all, that date of placement for collection is NOT the date upon which the exclusion period begins, it is the date of commencement of the delinquency on the OC account (plus an additionaly 180 days) that sets the date for begin of the credit report exclusion peirod.

That DOFD is a date=certain based only on the OC account history, and cannot be altered by when the account was placed for collection, or any other activity by the debt collector.

[Downto0]

So, the "placed for collection" date is used to set the date of first delinquency.  What are the guidelines, if any, after that?  Can the third party debt buyer list their placed for collections as the date "they" listed "their" account for collections?

It would not affect the dofd because that has pretty much been set in stone.  However, I don't think it is harmless.  I believe, as I have already said, that prospective lenders would be confused into thinking that I opened up a new account and immediately defaulted.  

[Anonymous]

"Placed for collection (by OC)", "charged off" or 'similar negative action', all are used in conjunction with immediate prior delinquencies to define the DoFD. The Exclusionary Date is defined to be the result of OC's action on the account, not anything CA does.

[Downto0]

I think I get the point.  I understood that the first "placed for collections" date is used for calculating the exclusionary date.  What I did not understand is if a third party debt buyer could list their own "placed for collections" which was years past the oc's "placed for collections".  As far as the dofd goes, they can:

(a) shall begin, with respect to any delinquent account that is placed for collection
(internally or by referral to a third party, whichever is earlier)

It is the earliest "placed for collections" which is used to calculate exclusionary period.  A hundred creditors or collectors could list a later "placed for collections" and the cras would simply ignore these entries when considering the dofd.

My point, however, goes past the dofd.  It's clear that the debt buyer wants my account to look recently defaulted and recently put into collections.  Putting "placed in collections" at the beginning of the report starts the illusion.  They also list current history and no history from the oc.  They also have a current date closed - I was not aware that the account was, apparently, reopened then immediately closed again.

I'm certain that the cras will purge this account in less than a year (10 months) because it is written right on my cr that they will.  The problem is that the debt buyer is ramping up their collection activities to include the most derogatory information that they think they can. I suspect that there will be at least some lenders that think that the account has recently been put into collections because that is how the report reads.  Some will see that the account is set to be purged in 10 months.  Others will not beause they are quickly looking through my cr and assessing all of my accounts.

Look, it's confusing to me as to why my account would be recently put into collections with only current history and why an oc is actually listed but no history of what happened there.  And, they don't list the oc's account number.  The debt buyer uses there own account number.  One could argue that if the debt buyer uses the oc's account number then the lenders could take a look at that account for history.  But, listing a very different account number precludes a lender from assuming that the oc and the oc's trade line are one in the same.  

I'm probably going to send the debt buyer a dispute.  If they don't answer then I will have a solid fdcpa violation.  All I need is one.

Stay tuned.

[Anonymous]

Downto0 - Waiting with baited breath....

[Anonymous]

Nobody is gonna actually look at your report . It's all computerized . The date that would hurt you the most is the "last reported" date . This date if recent counts as a whole new collection as far as your fico score . So for example if you have an old collection that hasn't reported in a year and then you get a new "report date" your fico score reads that like it would a new collection .