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Re-aging and credit reporting specifics

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ar8294



Joined: 16 Mar 2010
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244 Magic Points

Subject: Re-aging and credit reporting specifics
 
Posted on Mon Mar 22, 2010 12:24 am  

Q1 = I have read that the 7 year reporting period can't be renewed on closed end / open end accounts.

A judgment is a closed end account and cannot continue to be reported after 7 years.

However, does the 7 year rule apply to open end accounts? Can an open end account, e.g. an unpaid collection account, be reported - even though a payment is made after the 7 years? Does 7 years of reporting stop the re-aging clock?

Q2 = I have read that "if a judgment is converted to a lien, then a lien can remain on the credit report forever as long as it remains unpaid. Once it is paid, they still nail the consumer with an additional 7 years from the satisfied / released date."

My understanding is that a judgment is a lien? How can a lien be converted to a lien?
cinnamngrl



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Posted on Mon Mar 22, 2010 12:57 am  

Judgments can be reported after 7 years. They are usually on for 5-20 years and can be renewed after the period ends so they can stay on your credit report for ever basically. Whether a lien is entered does not matter.

it goes by state law

http://www.fair-debt-collection.com/SOL-by-State.html

you can check on this website
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NightStar



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Posted on Mon Mar 22, 2010 5:26 am  

Some states allow for 10 years, and after 10 years the judgment can be renewed.

So basically out of the first 10 years - the judgment shows on the credit report 7 out of the 10 years.

When it gets renewed it can report an additional 7 years out of the next 10 years.

You are correct about the Lien, Liens are different in that they can be placed against property, meaning if you have a house and a lien is attached, you can't sell the house until the lien is paid off.

Regular collections and charge offs can only report 7 years, no matter if you pay later. Now if you pay later it can renew the statute of limitations and if that happens then a judgment can be obtained. Thus adding another 7 to 14 years on the reporting.

Also the only exception to this rule is Student Loans, according to the FCRA a judgment can keep reporting like a lien as long as it is unpaid. But when I checked the higher education act it did not support this, so if you have a student loan, only time can tell what the credit reporting agency does.

Also there is a rule, that a full consumer credit report can be accessed by businesses when a consumer:

* Applied for a job were the pay is expected to exceed $75,000
* Applied for insurance that was expected to exceed $150,000
* Applied for a mortgage loan that was expected to exceed $150,000

These things will allow the company to see ALL of your past credit history - the credit reporting agency does not delete this just because the 7 years are up, they keep the data suppressed until a company for these reasons requests a full report.
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Aaron

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Subject: judgments
 
Posted on Mon Mar 22, 2010 6:50 am  

Hi ar,

Judgments can stay on your report for more than 7 years depending on the renewal of the judgment. A judgment can be renewed after the 7 years. If the creditor or collection agency realizes that they had not been able to collect on the judgment, they may renew the judgment. It does not depend on the lien. However, you can check your state laws on judgment to get more details.

Hope this helps.

Regards,

Aaron
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cinnamngrl



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Posted on Mon Mar 22, 2010 10:49 pm  

Nightstar, there is no 7 year limit on judgments. It can stay on your report for as long as the originating state allows.

In practice this rarely happens because the plaintiff has to pay for eoscar and keep renewing the judgment but it very bad for your credit. they can delete and then popup.
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NightStar



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Posted on Mon Mar 22, 2010 11:34 pm  

I don't know about the individual states, but I do know that the FCRA stipulates that a judgment only reports for 7 years. It can be renewed and another 7 years can report.

I do believe that the Credit Reporting Agencies follow the FCRA on this matter. Even if the state wanted to report longer.

I know the liens can report forever, but sometimes I have seen people show up with releases in certain states - where they had a SOL on them.
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Posted on Tue Mar 23, 2010 11:30 am  

FCRA states that judgments stay on your reports as long as the statute of limitations in the governing states allows.

states can even make stuff get deleted earlier. Did you know that paid charge offs can only be reported for 5 years in NY?

please feel free to show otherwise.

Liens are attached to property. the deed cannot be transferred without payment of the lien. They can be released by the court. even if you pay the lien, you still have to get the lien released.
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ar8294



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Subject: @cinnamngrl
 
Posted on Tue Mar 23, 2010 9:40 pm  

Where in FCRA doe it state that judgments can be reported as long as the state SOL allows?

I've read here that liens can be reported forever. Where does FCRA allow that?

Thanks
sdchargers_63

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Subject: credit
 
Posted on Wed Mar 24, 2010 12:42 am  

WOW!!! A Judgement can stay on your CR,....as long as you own the property it's 'leined' to? Is that my 'understanding'? If I'm MIS-understanding, please let me know.
ar8294



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Subject: confusing language
 
Posted on Wed Mar 24, 2010 7:57 pm  

This is a good site, however I am already seeing that a significant issue is the loose language that is used by many. It is leading to confusion and to added emails to undo the confusion. We must be careful to give complete answers and to use technical terms when referring to an item, instead of saying "it" or "them" etc.

The differences between credit reporting time limits and state statutes of limitation to bring suit is confusing to many, especially as they are being used interchangeably by those giving answers.

@cinnamngrl
Where does it say in FCRA that credit reporting time limits for judgments are set by the statute of limitations in the governing states? States do set reporting limits, but I have never seen where the reporting limit is tied to the statute of limitation to bring suit.

@sdchargers_63
If cinnamngrl is correct that the FCRA allows for reporting judgments up to the SOL, then, while the judgment is in effect for 20 years (NY) it will be continuously reported, but since the judgment can not be enforced after 20 years, it can then be removed.

My understanding is that (NY) a 10 year, 1 time renewable judgment, is reported on the credit report for the first 7 of the 10 years, and if the judgment is renewed, it is again reported for 7 of the next 10 years. My understanding is that after 7 years, the judgment must be removed. That means that FCRA allows reporting the judgment 14 of the 20 years, not the entire 20 years as a continuum.
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Posted on Wed Mar 24, 2010 8:23 pm  

ar8294

Thanks you said that better than I was doing.

I use to work for a credit bureau and the owner happen to also own a collection agency. So I do have it on good word that the reporting on the judgment can only be 7 out of 10 years - in the states that allow statute of limitations for 10 years, or 14 out of 20 years if a state has a statute of limitations that long.

Only when a judgment is converted to a lien against property does the statute of limitation change to unlimited reporting on unpaid debt.

The Credit Reporting Agencies are applying the national ordinate by the FCRA and what the FTC interprets it to mean in the staff opinion letters they added.

http://www.ftc.gov/os/statutes/fcrajump.shtm

I have seen some inconsistencies by what the FCRA says and what the Credit Reporting Agencies do, and it was not on this particular area. The difference I noticed was:

1. FCRA says all inquiries except employment can only be reported 1 year. Employment can be reported 2 years.

* But you know what the credit reporting agencies show all inquiries for 2 years, even though they only affect score 1 year.

2. FCRA says all student loan collections can be repopulated by each collection agency that handles the debt - forth going reporting indefinitely if it continues to be unpaid - (like a tax lien) but no where in the Higher Education Act can I find that the government will actually do that. They say items will come off after 7 years.

3. The only thing I have seen the credit reporting agencies do different per each state and that is:

* Adjust cost of consumer credit reports depending on consumers state.

* Adjust cost of freezes (concerning ID Theft) depending on consumers state.

* I do know if a state has a reporting requirement that is less then the Credit Reporting Agencies usual 7 year - like Massachusetts they will remove items early. In Mass. the expiration is 6 years. There may be more states other then this that I don't know about.

I think if the reporting is extended longer then the Credit Reporting Agencies policy, they just discount it and go with their (the credit reporting agencies) default policy.

This is an interesting subject, I use to have a guy at CSC Credit that I talked long hours with over different reporting rules in the FCRA and how the credit reporting agencies interpreted these rules.
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ar8294



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Subject: @Nightstar
 
Posted on Thu Mar 25, 2010 3:53 am  

Good post!

I have never heard that a judgment lien needed to be converted into a lien against property. This is a brand new concept to me.

In NY, at least, my understanding has always been that, by definition, i.e. as part of what makes a judgment what it is, the judgment automatically attaches itself to real property and is allowed to levy banks and other liquid assets, like stock. The sheriff or courts are involved in applying the satisfaction, but the judgment is the enabling vehicle.
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Posted on Thu Mar 25, 2010 4:28 am  

Huh, I didn't know that, I am from Illinois this state does allow garnishment and liens, but a creditor or collection agency has to file with the court to take further action to have these things done.

I have seen a good many judgments added to consumer reports with no further action to enforce collection on the judgment. So after the 10 - 20 years it just expires out of the statute of limitations.

A lot of landlords do this, they know if ever the consumer tries to obtain a mortgage loan - then the loan company will do a public record search and inform the consumer they are not allowed to get the loan until the consumer settles the judgment - for fear that the judgment can be attached to the house they buy.

So the landlord knows it is just a matter of time until the consumer has to come crawling back to make amends. Small mom & pop landlords don't have the money to pursue further action then just getting the judgment added.

When I process RMCR reports and found a judgment I had to call the court house to see if the judgment had been satisfied or released, and sometimes I actually had to go to the court house to read the file for myself. I would see all of the official entries of what had been done for each judgment, and there were many just entered with no further action to obtain a lien or garnishment.

It really depends on the plaintiff - the amount owed, and how aggressive they were to collect the debt.
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ar8294



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Subject: @NightStar
 
Posted on Thu Mar 25, 2010 3:59 pm  

Our system in NY is the same as you describe in IL. The judgment automatically attaches to real property.

Where does a judgment need to be converted to a lien that attaches to property?
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