Misconceptions Concerning Account Disputes and Removals
Just because a negative credit report entry is deleted, that does not mean it is not valid. In many cases, consumers and credit repair organizations are able to successfully dispute valid negatives and have them removed.
Having a bad debt removed from a credit report may not make the debt disappear, however. Provided the statute of limitations has not expired on the debt, the consumer in question may still be sued. In addition, the creditor can request that the previously deleted account be reinserted into the individual’s credit file.
The Law Regarding Negative Reinsertion
When an account is disputed with the credit bureaus, the Fair Credit Reporting Act (FCRA) gives these agencies only 30 days to investigate the debt. Investigation is usually conducted by requesting that the creditor in question complete a form verifying key pieces of consumer information.
If the creditor cannot complete the form or does not return the information to the credit bureau within the allotted time frame, the information is deleted from the consumer’s credit file. Unfortunately, it may not remain that way. Section 611 of the FCRA states:
“A consumer reporting agency shall maintain reasonable procedures designed to prevent the reappearance in a consumer’s file, and in consumer reports on the consumer, of information that is deleted...”
The phrase “reasonable procedures” is vague and roomy enough for legal interpretation, should the cause arise. In the event that negative information reappears without just cause, the reasonable procedures clause offers legal protection to the credit bureau since what is “reasonable” varies by opinion.
If a creditor wishes to reinsert a negative item into an individual's credit file, it must certify that the information to be reinserted is correct and complete. In addition, the credit bureau planning to allow the reinsertion must inform the consumer within five days of any changes being made to the individual’s credit file.
What to Do When Previously Deleted Items Reappear on a Credit Report
An individual has several options available to fight the reinsertion of a negative trade line such as:
- Request a new investigation with the CRAs
- Add a consumer statement to his or her credit report
- File a lawsuit against the creditor committing the reinsertion
If the item was previously deleted due to incomplete or inaccurate information, it is unlikely that the creditor would go to any lengths to procure the correct information merely to certify a reinsertion. For this reason, consumers should immediately file a new dispute on the reinsertion. If the item was removed previously, there is a solid chance it will be removed again.
Individuals who discover deleted accounts resurfacing within their credit histories do have the option to file a lawsuit against the creditor reporting the account or add a 100 word consumer statement to their credit file explaining the notation.
If the item was previously deleted due to an expired reporting period and then reappears, this is against FCRA reporting laws. An individual must merely notify the credit bureaus of the expired reporting period to have the negative trade line removed.
Reinsertion of Disputed Debts is Uncommon
Few creditors will go to any lengths to certify and reinsert a previously deleted debt into a credit file. The reasoning is simple. Taking extra time and effort for one person over one situation when the company most likely holds thousands of accounts is a waste of time and money for the company. If the debt of one person slips through the cracks, there are new debts being accrued every day that will be easier to collect on.
One creditor whom no individual should expect to budge is the IRS. Unpaid tax liens appear on a credit report as “Public Records” and are notoriously difficult to have removed. In the event that a tax dispute is successful, not only will the IRS reinsert the debt but sluggish collection activity will be renewed with vigor. If, however, the tax lien was previously paid the IRS is unlikely to reinsert the lien.