Home Buddies - Houston Credit Repair Coach for Investors and Homeowners

Can I remove a Charge Off on my Credit Report?

Sometimes, for too many people, they end up in a situation where they just cannot pay off a debt, and then that particular creditor issues a charge off. Usually a credit charge off occurs when payments aren’t made for more than 6 months. A credit charge off is stating that the unpaid debt is being reported by the creditor as a loss when he uses accounting methods for his tax purposes. A charge off doesn’t mean that your debt is canceled or forgiven. You do still owe the debt. And, it does have a negative impact on your credit. It can stay on your credit report for 7 years.

If the creditor feels that he will not be able to collect the debt from you, he writes off your account as a bad debt. But, the creditor still has the right to collect the debt from you. If the creditor decides to not try to collect your unsecured debt (like credit card, personal loan, etc), he can sell it to a collection agency. This agency will then begin to pursue you to collect the debt.

There are certain things to keep in mind when you attempt to remove the charge off from your credit report in order for the end result to have a positive affect on your credit score. And be sure to pay attention to the Statue of Limitations (SOL). If the SOL period is still in effect for that particular debt, the creditor/collection agency can file a lawsuit against you and try to collect the unpaid debt, even after charge off. But when the SOL period expires, (this varies from state to state, usually is 4-6 years) there will be no lawsuit against you, but the creditor or collection agency still has the right to collect it from you. If you make a written promise to pay off the debt or make a partial payment after the SOL expires, then the SOL period may start over again. Be sure to check with your state’s SOL laws and time periods.

Ok, so you are going to go ahead and remove the charge off from your report. If it’s a recent charge off, then it’s usually better to pay it off; and also ask the creditor to report it to the credit bureaus as “Pay for Delete”. You are negotiating with the creditor or collection agency to remove the charge-off from your credit report. Be firm. If you really can’t get them to agree to mark it as “Pay for Delete”, then at least try to get them to mark the charge off on your credit report as “Paid Charge off”.

If you try to settle the debt, by making a partial payment, then the creditor may report it as “Settled Charge off”.

Special note: If you have a charge off on your credit report and wish to get a mortgage, the lender would probably prefer for you to pay it off and then go for the mortgage. A mortgage charge off implies that a lien still exists on the title and the lien can only be removed once it is paid off. A “Paid” or “Settled” charge off on a mortgage debt helps to remove the lien from the house title.

Good luck.

Barbara Partaka
Home Buddies