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Imagine your credit report as a financial history book that tells the story of your past debt and payment behaviors. Thankfully, negative information on your credit report doesn’t stay there forever. This process of negative items being automatically removed from your credit report is known as “falling off.”
Think of it this way: every debt that goes unpaid or gets sent to collections starts a countdown timer. When that timer reaches zero – typically after seven years – the debt must be removed from your credit report, even if you never paid it. This removal process is automatic and required by law, offering a light at the end of the tunnel for those struggling with past financial difficulties.
However, many people misunderstand what it means when debt falls off their credit report. In this article we’ll define and clarify what it means when debt falls off, and include a range of timelines based on various types of debt.
Falling off, explained
The term “falling off” refers to the process where negative information, including debt-related items, is automatically removed from your credit report after a specific period. While the debt disappears from your credit history and stops affecting your credit score, you may still legally owe the money. Think of it like erasing the record of the debt without erasing the debt itself.
Understanding when and how debt falls off your credit report is crucial for managing your financial future. Whether you’re dealing with old collection accounts, late payments, or other negative marks on your credit report, knowing these timelines can help you make informed decisions about your debt and credit management strategies.
Standard timelines for different types of debt
Let’s break down how different types of debt typically fall off from credit reports…
1. Collection accounts
- Timeline: 7 years from the date of first delinquency.
- What this means: The clock starts ticking from the date you first became delinquent on the original account, not when it was sent to collections.
- Important note: Transferring the debt to a new collection agency doesn’t restart the clock.
2. Late payments
- Timeline: 7 years from the date of the late payment.
- What this means: Each individual late payment has its own 7-year clock.
- Important note: Subsequent late payments don’t extend the timeline of earlier ones.
3. Charge-offs
- Timeline: 7 years from the date of charge-off.
- What this means: Starts when the original creditor writes off the debt as uncollectible.
- Important note: Making payments after charge-off doesn’t extend the reporting period.
4. Bankruptcy
- Chapter 7: 10 years from filing date.
- Chapter 13: 7 years from filing date.
- Important note: Individual accounts included in bankruptcy may fall off sooner.
5. Tax liens
- Timeline: 7 years from the date of payment for paid tax liens.
- Important note: As of 2018, the credit bureaus no longer include tax liens on credit reports.
6. Judgments
- Timeline: 7 years from the filing date.
- Important note: Like tax liens, civil judgments are no longer included on credit reports as of 2018.
Understanding the starting point: Date of first delinquency
The “date of first delinquency” is crucial for determining when debt will fall off your credit report. Here’s how to identify it:
- Original delinquency: The date you first missed a payment and never caught up
- Continuous delinquency: The account must remain delinquent
- No reset: Making a payment after long-term delinquency doesn’t restart the clock
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Common myths about debt falling off
Let’s clarify some misconceptions people have about how debt falling off works…
Myth 1: Making a payment restarts the clock
- Reality: The 7-year period is based on the original delinquency date.
- Exception: Making a new promise to pay or signing a new agreement could restart the statute of limitations for legal action, but not the credit reporting timeline.
Myth 2: Debt never falls off if you don’t pay it
- Reality: All negative information must be removed after the specified time period, regardless of payment status.
- Exception: None. Even unpaid debt must be removed after 7 years.
Myth 3: Falling off means you no longer owe the debt
- Reality: The debt’s removal from your credit report doesn’t eliminate your legal obligation to pay.
- Important: Creditors can still attempt to collect, sue, or sell the debt to collectors.
What happens when debt falls off?
So, now that we understand what falling off means and how it applies to various forms of debt, let’s dig deeper into exactly what happens…
Impact on your credit score
Your score may increase significantly as soon as the debt falls off. The exact increase depends on:
- Age of the debt
- Size of the debt
- Your other credit factors
- Overall credit profile
Other considerations
- Credit report updates: May take 30-45 days to reflect across all bureaus.
- Verification needed: Check all three credit reports to ensure removal.
- Documentation: Keep records showing when debts should fall off.
How to track when debt will fall off
Now that you know approximately when your type of debt will fall off, how exactly will you know?
1. Review your credit reports
- Get free reports from annualcreditreport.com.
- Identify the date of first delinquency for each account.
- Calculate the 7-year mark from this date.
2. Keep good records
- Save all correspondence with creditors.
- Document payment histories.
- Keep track of original delinquency dates.
3. Set up monitoring
- Use credit monitoring services.
- Create a calendar reminder for expected fall-off dates.
- Check reports regularly for accuracy.
When to seek professional help
Consider consulting professionals if:
- Debt isn’t falling off as scheduled.
- You’re being sued for old debt.
- You need help understanding your rights.
- Creditors are violating collection laws.
Know your rights
- Fair Credit Reporting Act (FCRA): Governs credit reporting timelines.
- Fair Debt Collection Practices Act (FDCPA): Regulates collection practices.
- State Laws: May provide additional protections.
The bottom line
Understanding when debt falls off your credit report is crucial for managing your financial health. While waiting for negative items to fall off, focus on building positive credit history and maintaining good financial habits. Remember that falling off doesn’t eliminate the debt—it simply removes it from your credit report. Keep detailed records, know your rights, and take proactive steps to improve your credit profile.
If you’re dealing with debt that should have fallen off but hasn’t, don’t hesitate to dispute the information with credit bureaus or seek professional assistance. Your credit report significantly impacts your financial life, so it’s worth taking the time to understand and monitor these important timelines.
There’s always JG Wentworth…
Do you have $10,000 or more in unsecured debt? If so, there’s a good chance you’ll qualify for the JG Wentworth Debt Relief Program.* Some of our program perks include:
- One monthly program payment
- We negotiate on your behalf
- Average debt resolution in as little as 48-60 months
- We only get paid when we settle your debt
If you think you qualify for our program, give us a call today so we can go over the best options for your specific financial needs. Why go it alone when you can have a dedicated team on your side?
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The information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that You consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.
* Program length varies depending on individual situation. Programs are between 24 and 60 months in length. Clients who are able to stay with the program and get all their debt settled realize approximate savings of 51% before our 25% program fee. This is a Debt resolution program provided by JGW Debt Settlement, LLC (“JGW” of “Us”). JGW offers this program in the following states: AL, AK, AZ, AR, CA, CO, FL, ID, IN, IA, KY, LA, MD, MA, MI, MS, MO, MT, NE, NM, NV, NY, NC, OK, PA, SD, TN, TX, UT, VA, DC, and WI. If a consumer residing in CT, GA, HI, IL, KS, ME, NH, NJ, OH, RI, SC and VT contacts Us we may connect them with a law firm that provides debt resolution services in their state. JGW is licensed/registered to provide debt resolution services in states where licensing/registration is required.
Debt resolution program results will vary by individual situation. As such, debt resolution services are not appropriate for everyone. Not all debts are eligible for enrollment. Not all individuals who enroll complete our program for various reasons, including their ability to save sufficient funds. Savings resulting from successful negotiations may result in tax consequences, please consult with a tax professional regarding these consequences. The use of the debt settlement services and the failure to make payments to creditors: (1) Will likely adversely affect your creditworthiness (credit rating/credit score) and make it harder to obtain credit; (2) May result in your being subject to collections or being sued by creditors or debt collectors; and (3) May increase the amount of money you owe due to the accrual of fees and interest by creditors or debt collectors. Failure to pay your monthly bills in a timely manner will result in increased balances and will harm your credit rating. Not all creditors will agree to reduce principal balance, and they may pursue collection, including lawsuits. JGW’s fees are calculated based on a percentage of the debt enrolled in the program. Read and understand the program agreement prior to enrollment.
JG Wentworth does not pay or assume any debts or provide legal, financial, tax advice, or credit repair services. You should consult with independent professionals for such advice or services. Please consult with a bankruptcy attorney for information on bankruptcy.