How should a furnisher report an account when a state law has extinguished the underlying debt, so the consumer no longer owes it?
State laws are increasingly shaping how consumer debt is handled. Some state statutes go beyond limiting collection lawsuits and extinguish the debt itself, which means the consumer has no remaining legal obligation to pay. When that happens, keeping a balance on the tradeline is inaccurate. Metro 2 handles this with a dedicated Special Comment Code, DE (Debt Extinguished Under State Law), plus specific field rules and a defined end to reporting.
Definitions and context
A debt is extinguished when the law ends the obligation entirely. That’s different from these related situations:
- Paid in full: The consumer satisfied the debt.
- Settled: The creditor accepted less than the full balance.
- Charged off: The creditor wrote the balance off as a loss, but the consumer may still owe it.
- Time-barred: The statute of limitations has run on lawsuits, but in many jurisdictions the debt still exists.
Extinguishment is a legal conclusion, not a business decision. Furnishers should rely on their legal or compliance teams to decide whether a particular state law extinguishes the debt or only limits remedies. Special Comment DE is available across Metro 2 portfolio types, including revolving, installment, mortgage, open and line of credit accounts.
Step-by-step reporting standards
Once you’ve confirmed the debt was extinguished under state law, report these Base Segment fields:
- Scheduled Monthly Payment Amount (Field 15): Report zero. The consumer has no further payment obligation.
- Account Status (Field 17A): Report the status at the time the debt was extinguished. For example, if the account was charged off when extinguishment occurred, report the charge-off status.
- Special Comment (Field 19): Report DE (Debt Extinguished Under State Law).
- Current Balance (Field 21): Report zero.
- Amount Past Due (Field 22): Report zero.
- Discontinue reporting: After you report Special Comment DE, stop reporting the account in later periods. The DE update is the final disposition.
The Account Status restriction (and why it matters)
When you report Special Comment DE, the Account Status must not be 13 (paid or closed, zero balance) or 61 through 65 (the paid-in-full and settled statuses). The reason is simple: extinguishment is not payment. Those status codes tell data users the consumer resolved the debt through payment or settlement. Pairing them with DE sends a mixed message about how the account ended.
Reporting the status in effect at extinguishment, together with a zero balance and the DE comment, gives an accurate picture. The account had a given status, and the obligation then ended by operation of state law.
Compliance requirements
The FCRA requires furnishers to report information that accurately reflects the terms of and liability for the account. When a state law extinguishes a debt, the consumer’s liability is gone, so a reported balance would misstate it. Common problems include:
- Leaving a balance on the tradeline. Once the debt is extinguished, any nonzero Current Balance or Amount Past Due is inaccurate.
- Reporting a paid or settled status. As explained above, codes 13 and 61 through 65 don’t belong on an extinguished debt.
- Continuing to report after the DE update. Metro 2 makes DE a final disposition, so ongoing monthly updates should stop.
- Treating time-barred debt as extinguished, or the reverse. The two are legally different. Misclassifying them in either direction creates accuracy risk, so document the legal basis for each determination.
- Changing historical data. DE closes out the tradeline. It’s not a reason to rewrite the prior Payment History Profile or the Date of First Delinquency.
Impact on consumers
For consumers, the most important effect is that the reported balance and amount past due drop to zero. That removes the debt from debt-to-income calculations and keeps lenders from treating it as an outstanding obligation. The DE comment also explains why the balance is zero without suggesting the consumer paid or settled. Reporting extinguished debts accurately supports the consumer protections behind these state laws and cuts down on disputes from consumers who know the law has cleared their obligation.
Conclusion
When a state law extinguishes a debt, report Special Comment DE, zero out the Scheduled Monthly Payment Amount, Current Balance and Amount Past Due, and report the Account Status in effect at the time of extinguishment. Don’t use status 13 or 61 through 65, and stop reporting after the DE update. Base each extinguishment decision on a documented legal review, because the gap between “extinguished” and “time-barred” is where most of the compliance risk sits.