Question about Charge Offs

Discussion in 'Budget Board' started by In A Jam, Jul 10, 2006.

  1. In A Jam

    In A Jam Earning My Ears

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    Charge offs stay on a credit report for 7 years, right? When does that 7 year mark start? Is it when the account first charges off or when the account has been paid off.

    Background:

    I had several credit cards and due to circumstances some were charged off. I have started with a credit counseling company and am making monthly payments to each credit now.

    I did have one account that was charged off and went to an collection agency. I paid that off last year.

    I am working to get my credit back on track. I did take out a personal loan (I had a cosigner) and I am making ontime monthly payments. I also have a couple credits cards now (VERY low limits). They are being used to help raise my credit score (they report monthly). I am trying not to go crazy with them now.

    I am still behind on payments for some things, but am working to get everything caught back up.
     
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  3. tinatark

    tinatark DIS Veteran

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    7 years from last activity.

    Some people have had success negotiating with the companies to take them off the reports, either when they pay off a chargeoff or by disputing them. At the very least, it should be reporting as a "paid charge off"
     
  4. Chicago526

    Chicago526 <font color=red>Any dream will do...<br><font colo

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    Yep, 7 years. When possible try to negotiate a removal of the tradeline (or a positive tradeline) in exchange for payment.

    Also, if they offer you a settlement for less than your balance, the differance must be reported as income. If you owed $1000 and the offer you to settle it for $600, then you must report the $400 differance on your tax return.
     
  5. summerrluvv

    summerrluvv <font color=darkorchid>Work Hard. Have Fun.<br><f

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    Check out the forums on www.creditboards.com. It's VERY helpful. A simple dispute would probably get it taken off.
     
  6. MyGoofy26

    MyGoofy26 DIS Veteran

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    Did the collection agency buy the debt? Or were they assigned the debt? There's a very good chance (especially if the CA bought the debt) that your original tradeline went unchanged and will fall off 7 years from date of last delinquincy. On the flipside, you probably have a tradeline from the CA now which looks worse.

    You can call the credit bureaus and ask for an estimated date that any account will fall off. They can tell by your history your dates of last delinquincy and activity when your account is scheduled to fall off (provided there are no other changes between then and now)
     
  7. pearlieq

    pearlieq <font color=green>They can sit & spin<br><font col

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  8. picantel

    picantel Mouseketeer

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    This is not true. You may get a 1099-C form to fill out. IF you do not receive this then you do not have to report the difference unless you feel like donating to the government. 90% of the time you will never see this form.
     
  9. Jon99

    Jon99 DIS Veteran

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    I had a chargeoff that fell off my CR a few months ago, raised my FICO a whopping 3 points... :)
     
  10. brandylouwho

    brandylouwho DIS Veteran

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    This is the exact answer I was going to post!!! 7 years from last activity.

    And keep any paperwork you have on what you paid. I work at a mortgage company and so many times we have to try to prove what was paid or not paid 5 years ago...the customers don't always know or remember, the bank may not even exist anymore...you get the picture. It causes more headaches and stress for people who are excited & already stressing about buying a house! Sometimes people even end up having to payoff old charge offs in order to qualify for the mortgage (every situation differs).
     
  11. MyGoofy26

    MyGoofy26 DIS Veteran

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    A lot of times, if the chargeoff is one of your older accounts, the chargeoff status starts to mean less than the age. Sounds like yours was close to being one of your older accounts. I've seen a lot of people on Creditboards say their FICO actually tanked when the chargeoffs came off because it killed their age.
     
  12. picantel

    picantel Mouseketeer

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    Keep all paperwork of everything you pay off(obviously your phone bills each month and stuff like that is not needed). If you close a bank account get a statement with the 0 balance and keep it for 20 years at least. I cannot tell you how many thousands of times I have seen people come to the forums on a paid debt that some scum CA comes after them for 10 years later. Just had someone email me on a paid bounced check from 6 years ago. The CA started threatening criminal action(illegal) even though the consumer sent them a receipt. Obviously that CA is now being sued.
     
  13. Chicago526

    Chicago526 <font color=red>Any dream will do...<br><font colo

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    That's not my understanding, every source I've ever read on the topic says that you need to include it in your income. Here's the most recent article I've read on the topic.

    Of course no one should ever 100% rely on advice they get from message boards (even my own! ;) ), always ask a profesional! :)

    http://moneycentral.msn.com/content/Taxes/Cutyourtaxes/P59989.asp

     
  14. picantel

    picantel Mouseketeer

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    only if you get the form. if you do not get one then do not report it. Not all agencys do send them out.
     
  15. dawnball

    dawnball <font color=red>bouncie bouncie...<br><font color=

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    Well, if you don't get the form (so the IRS doesn't get their copy), then the IRS has no way of knowing that you were supposed to report it. However, the tax code is pretty clear that you are obligated to report it - since it is income.
     
  16. luckofthedraw

    luckofthedraw Mouseketeer

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    The emphasis in all of this is that the chargeoff will fall off seven years after your DOLA (date of last activity). This means seven years after you either pay it off completely or seven years after you just stop paying it.

    Just like the 1099 issue, the ethics part is up to you.
     
  17. jenr812

    jenr812 <font color=deeppink>I'm wondering how outta hand

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    Exactly. And you can bet your last dollar that the company does have a record of the transaction. If they are ever audited, the IRS will find out that you had "earned income" that went unreported by you. It's always good to just do the right thing, especially when the IRS is involved ;) I run into this issue with mystery shopping a lot - you only get a 1099 if you make more than $600 from the company. That doesn't mean you don't HAVE to report it if you make less than that. Many people get confused by that.
     
  18. picantel

    picantel Mouseketeer

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    This is not true also. Where do you people come up with this stuff. If it was charged off 5 years ago and you pay it off then it comes off in 2 years- not 7. And once again you need only report the income if you RECEIVE A FREAKING 1099-C.
     
  19. jenr812

    jenr812 <font color=deeppink>I'm wondering how outta hand

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    Why the hostility??? I will tell you where I come up with my info - the credit bureaus and the IRS. I have dealt with identity theft, inaccurate credit reports, and unearned income since the mid 90s.

    This depends on the type of account, but for the most part is basically true, especially thanks to a fairly "new" law that is finally being enforced by the FCRA.
    This is NOT TRUE! As I stated before, companies are not required to file 1099s for every person they pay money to as a way to lower paperwork. Part of the paperwork reduction act. BUT that does not remove the taxpayer's responsibility to report the income. This is for any income, not just forgiven debt. It is for self employed income (I have a lot of experience with this for mystery shopping and merchandising), babysitting, providing other services - basically any kind of MISCELLANEOUS income which is what a 1099 is for. I don't understand why someone gets so irritated without even checking the "facts" they are providing to see if they are accurate or not.

    It does NOT say "if you don't receive a 1099 you don't have to report the money" or "you only have to report if you receive a 1099". It is dangerous to give out or accept tax info/advice because everyone thinks they are an expert.

    To the OP - Obviously there is a difference of opinion - your best bet is to consult a certified tax consultant. But the above info is straight from the IRS website btw. HTH!

    As an aside I find this part of the tax law is hilarious
    :rotfl:
     
  20. Anewman

    Anewman <font color=green>Likes it topped with relish<br><

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    No it does not say that, but the article does state that the amount is in BOX 2 of the 1099. If there is no 1099, there is no BOX 2 and hence no amount

    Just being a nerd, sorry I could not ressist.
     
  21. jenr812

    jenr812 <font color=deeppink>I'm wondering how outta hand

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    Nerd!! :p It says *IF* the debt is over $600 then you'll get the 1099 and then you'll report the amount in box 2. But otherwise there is STILL an amount - you just have to add up your income by yourself :teacher:
    bolding mine ;) :p
     

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