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CHARGED OFF DEBTS ON YOUR CREDIT> THE 7 YEAR RULE
Is an old debt sitting on your credit reports for longer than it should be? Don't be surprised- you are not alone. There are many misconceptions about debts charged off prior to 1996 and it is probably one of the most common questions we get. Often referred to as the SOL - statute of limitations for credit. There are actually 2 things to worry about. The SOL for reporting bad credit and the SOL for collecting debts. Both have their own time limits. A charge off is the term a creditor uses when they write off your debt because you didn't pay it back. You CAN be taxed on that debt!

Charged off debts and how long can they remain on your credit reports? You have to remember, the old FCRA (before revision) was very ambiguous, which means, even though it was not specific for saying exactly when a date commenced, it was often thought that making a payment could renew the statute of limitations and the seven year clock would start all over again.

Consumers were very worried about this because it was a catch 22 in their mind. If I pay a portion of it, they can come after me again and it will stay on my credit for another 7 years so why bother? That was the general consensus and trying to get a straight answer out of a debt collector or the credit bureaus was even more frustrating.

Wiki Fact
In accounting and finance, bad debt is the portion of receivable that can no longer be collected, typically from accounts receivable or loans. Bad debt in accounting is considered an expense. The creditor will report bad debt losses to the IRS.

There are two methods to account for bad debt:

Direct write off method (Non - GAAP)
A receivable which is not considered collectible is charged directly to the income statement.

Allowance method (GAAP)
An estimate is made at the end of each fiscal year of the amount of bad debt. This is then accumulated in a provision which is then used to reduce specific receivable accounts as and when necessary.

By understanding the credit laws you can determine how much longer you need to wait for the item to be removed. You don't have to be in credit purgatory forever. So just how long can an item legally remain on your credit reports and how do you remove it sooner?

RELATED Debt Settlement ARTICLES Statute of Limitations You should always check the SOL on any old or charged off debt before paying it. Collection and UCC codes/laws UCC and collection laws can assist you in finding out if your state accepts negotiable instruments and what rules apply to collection agencies and their state. Debt settlement coaching Absolutely the best debt settlement coaching videos around! Hoffman, Brinker can teach you how to settle your debts, perhaps reduce the payoff by 60% and learn everything a professional negotiator knows by watching his engaging educational videos on debt settlement tips and tactics. Get immediate help for debt settlements and consolidation Credit cards and other unsecured loans can be put into a debt reduction plan. See how much you can save!

The remainder of this article plus many more credit repair and debt collection defense articles along with the credit repair debt collection success strategies ebook, sample letters (over 40!) are for Members only but it's only a one time fee of $49.95 to gain access to all of that! Membership is lifetime too! Purchase the credit and collections success strategies and receive access to all of our articles, tips and tools. Already a member? Log in.

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