Right now, many creditors may be considering making accommodations to consumers affected by COVID-19 by offering different ways to help ease the burden of existing debt obligations. In doing so, creditors should take care to follow the special credit reporting rules for such accommodations set forth in the recently passed Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).
Specifically, Section 4021 of the CARES Act amends the Fair Credit Reporting Act (“FCRA”) as follows:
- Covered period – These rules apply between January 31, 2020 and the later of (i) 120 days after the date of enactment (i.e., July 25, 2020 – 120 days from March 27, 2020 enactment), or (ii) 120 days after the date on which the national emergency concerning COVID-19 terminates;
- Creditors may agree to payment accommodations during COVID-19 – Creditors / data furnishers may agree to defer payments, allow partial payments, forbear delinquent amounts, modify a loan contract or offer other assistance or relief to a consumer affected by COVID-19;
- Reporting on accommodations – If a furnisher makes an accommodation concerning a payment(s), and the consumer makes the payment(s) or is not required to make payment(s) pursuant to the accommodation, then –
- The furnisher must report the credit obligation / account as current; or
- If the credit obligation / account was delinquent before the accommodation, then maintain the delinquent status during the period in which the accommodation is in effect, and if the consumer brings the credit obligation / account current during this period, then report the credit obligation / account as current;
- But, these reporting rules do not apply to credit obligations / accounts that have been charged off.