How to Fix or Remove Charge Offs
When an account is unpaid for more than 180 days, a creditor usually writes off the debt as a loss on their financial statements. This is known as a charge off. Once a debt is charged off, it is either transferred to an in-house collections department or sold to a third-party collection agency who will likely contact you in attempt to recoup the balance.
In addition to annoying calls and emails, a charge off spells bad news for your credit report. Not only will it likely remain in your file for up to seven years, it may significantly affect your credit score as well. In response to a lower credit score, your current creditors may raise your interest rates, resulting in higher payments and more money spent over the life of the loan. In addition, new creditors are less likely to work with you if they see a charge off on your credit report. Despite these harsh truths, it is possible to fix or remove a charge off on your own or with the help of a credit repair expert. Begin by:
- Reviewing and validating. Inaccurate reporting can cause additional damage to your credit report. Ensure that the details of your charge off are correct by ordering copies of your credit reports from the three major bureaus. Things the creditor should be able to prove in writing are:
- The initial agreement between yourself and the creditor
- A transfer of debt ownership to a third-party collection agency (if applicable)
- Your payment history
- The current account balance
- Fees and penalties added to the account
- The collection agency's bonded right to pursue the debt in your state of residence
The creditor or collection agency has 30 days to validate your debt. If they can't, it must be removed from your credit reports. If they can, you still have a few options, including:
Striking a bargain. Your creditor or collection agency may be willing to strike a bargain in exchange for partial or full payment of the debt. Ask if they will remove the citation from your credit reports if you agree to a settlement. Require a letter of agreement in writing before submitting payment in the form of a money order or certified check. Document each step and provide copies of your agreement to the credit bureaus. If you're working with a credit repair specialist, keep that company informed regarding any creditor correspondence you receive directly.
Waiting for the citation to expire. If your creditor or collection agency will not remove the citation, repaying the debt could actually cause further damage to your credit score. "Re-aging" occurs when the date of the last derogatory notation is updated on your credit report. If you decide to pay a long-overdue collection account, it could reactivate the debt on your credit report, resulting in unnecessary damage. In this situation, it is important to weigh the pros and cons of debt repayment. While seven years is a long time to wait, it may be preferable to re-aging old debts.
Charge offs are complicated and delicate in nature. Choosing the right path is dependent on your personal situation. The help of a credit repair professional is essential, especially when debt collectors are involved. This is where Creditrepair.com comes in. We can help you navigate through your charge off struggles and find a solution that will benefit your credit the most.
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