Can a Charge-Off Come Back After 7 Years?

by Jeannine Mancini

When a creditor is unable to recover money from a debt you owe, they write-off the debt as a loss for tax purposes. The debt will appear on your credit report as a charge-off, which will have a negative impact on your score for at least seven years. A charged-off account does not go away. In some cases, the charge-off can come back to haunt you, even after seven years have passed.

Fair Credit Reporting Act

Under the Fair Credit Reporting Act, a charge-off can only remain on your credit report for seven years. Until the account is charged off by the creditor, it is reported to the credit bureaus as delinquent. If you do not make any attempts to pay the debt, it will fall off your credit report in seven years. After a debt is charged off, it may be sold to a third-party collection agency, who will attempt to collect the debt.

Date of Last Activity

The Fair Credit Reporting Act requires the bureaus to erase the charge-off after seven years from the date of last activity. If you make a payment to the creditor or collection agency, the clock starts all over again. For example, if you make a single payment after six years, but cannot pay off the debt if full, the collection agency can restart the clock, and the charge-off will appear for another seven years in your credit history.

Collection Activity

Just because the debt is charged off does not mean the collection efforts will stop. After charging off your debt, the creditor may turn the debt over to an in-house collection agency or sell it to a third-party debt collector for pennies on the dollar. The Fair Debt Collection Practices Act outlines the regulations for collecting your charge-off. A debt collector can attempt to recover the debt even after the debt is removed from your credit report. However, after the statute of limitations expires, the debt collector can no longer obtain a judgment or wage garnishment. The statute of limitations varies depending on the state. On average, the statute of limitations for credit cards is four to six years. For installment loans and other written contracts, the statute of limitations is up to 10 years.

Deleting the Debt

If the charge-off is on your account after seven years since the date of last activity, file a dispute with the credit bureau. You will need to file a separate dispute with each credit bureau reporting the charge-off. After filing the dispute, the credit bureau will investigate the account. The current creditor must respond within 30 days, providing evidence to show the date is correct. If the creditor does not respond or fails to provide proof, the credit bureau must delete the account from your report.

About the Author

Jeannine Mancini, a Florida native, has been writing business and personal finance articles since 2003. Her articles have been published in the Florida Today and Orlando Sentinel. She earned a Bachelor of Science in Interdisciplinary Studies from the University of Central Florida.