What Will Happen If I Have a Charge-Off On My Credit Report?
December 27, 2009 by Matt Douglas
Filed under Credit Debt
Many people want to know if it is possible to remove a charge-off from their credit report. The answer is, it may be difficult, but it can be done.
A typical charge-off scenario is where a borrower will miss several months of payments. These can be payments missed altogether or late payments. At this point, the creditor will try to reach you through phone calls or letters trying to get you to bring your account current. Once the creditor is convinced that it will not be able to collect from you, the creditor will often write-off the debt.
Negotiating a payment plan with the creditor is the best thing to do at this point in order to prevent the account from being sent to collections. It is best to contact your creditor and begin a dialogue with it as creditors are typically willing to make arrangements if you are experiencing a difficult time. It is never wise to ignore the attempts of your creditor to contact you.
The debt you owe, and which your creditor now perceives as uncollectible, may be sold to a collection agency. You may have heard of collection agencies and the way they do business. Their tactics often include harassing phone calls and threats to file a law suit.
Your credit report can carry a charge-off entry for seven years. Your chances of obtaining additional credit will suffer and your credit score will be greatly damaged. These are not things you want to happen! In light of this, it is best to try to have charge-offs removed.
It will be necessary to obtain a copy of your credit report to start the charge-off removal process. Review your credit report for any inaccurate or false information once you receive it. Inaccurate or false entries can be removed from your credit report by writing the credit reporting bureau and explaining your claim. Be sure to provide the credit reporting agency with copies of any documentation which confirms your claim. The credit reporting agency must verify your claim within 30 days or else it must remove the credit item in its entirety.
If you contact the collection agency, it may be willing to come to an agreement with you. As you enter your negotiation with it, keep in mind that collection agencies purchase debt for cents on the dollar so the collection agency may well be willing to agree to a reduced total amount due. You can either offer a lump sum payment in exchange for this reduced amount or you can attempt to arrange a payment plan for the full amount. Above all, be sure that you obtain in writing an agreement which states the charge-off will be removed from your credit report or, at the very least, that the charge-off be reduced to a “paid” status.
To summarize, if you find yourself falling behind in your payments, contact your creditor and try to work out an arrangement to avoid a charge-off. If the charge-off account ends up with a collection agency, attempt to negotiate with the collection agency to pay the debt and remove the charge-off entry from your credit report.
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