Charge -Off debt in the credit report

Moonchild,

Welcome to forums :D

Charge-off is a derogatory notation that hurts your credit score. Generally when a debtor fails to pay the bills, creditor adopts different techniques to collect it. If none of the methods are of any avail, they report it as a charge-off and the account is considered as bad debt, which means non-collectable.

Charge-off does not indicate that you are no more obliged to pay the debt. It is still your debt and you should pay it back.

Now if you have charge-off mark in your credit record, it clearly proves that you did not pay your bills for some reason or other and your future financers are going to consider it as a negative comment.

Generally a charge-off mark stays in your report for 7 years from the date it went delinquent. Hope this helps; feel free to ask your question if you have any more doubts.

If I may jump in here, :D

If you pay off debt, as you should, the creditor is then suppose to show it as 'paid charge off'. Which is still negative as they won't completely take it off once its paid but it does at least show that you paid and shows credit checkers that you did in fact pay. still negative but a little more softer than just a 'charge off'.

Once you get the charge off on your credit report, the damage has been done. And if you haven't started hearing from collection agencies by now, you will because where a lot of people get confused, they think the charge off means they no longer have to pay, but thats incorrect.

I'm in this situation so thought I could help. :D Shirley

Shirley,

I have one charge-off in my report for last 6 years. I know I am obliged to pay the debt, however the SOL is expired as per my state laws. Now if I pay the debt in full (I can, since I have got a job luckily), my lender will report it as ???paid charge-off', right?

My question is how long this ???paid charge-off' mark will remain in my report? Will it be there for another 1yr? Or it will take 7 yrs more to get it removed?

And what if I start paying it in installments and fail to continue? Thanks in advance :D

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okay, I will try to help you but-first off-I'm not a moderator here, I'm just a joe-blow debtor like yourself, that ran into some hard times and is trying to get straightened back out. But I have learned alot from being in this forum.

From what I understand, If you pay it now in FULL, it will be updated to "paid charge off", and still remain for the remainding year that you have left with it on your credit report. But it will show it as being paid.

If you make monthly payments on it, it will be renewed and start the cycle all over again and still remain as just a 'charge off' if you fail to pay off.
You would be better to either pay it off, so that your remaining year is a little more positive. since a "paid charge off' is a little softer than just a 'charge off'. Or wait out the year and let it go off your report all together since the SOL has ran out in your state.

this is my understanding.
Guys, jump in here and straighten me out if I'm wrong. But this is my understanding.
:D Shirley

sorry Ben, I see that you already handled this :wink: shirley

I know that once I make a payment SOL will get restarted. I am concerned about my credit report. So what comes out from your posts-

If I pay in full, it will be reported ???paid charge-off' and remain there for another 1yr.

If I pay in installments, it will be there for another 7 yrs. Am I right?

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waht does SOL stand for?

Hi! SOL means-Statue of Limitations. Seven years is the SOL or statue of limitations on your credit report-after that it falls off, but the SOL of the debt itself is up to your state law. Many states have SOL set at 5 years, I live in Tennessee, so mine is 6. Hope I have helped here. In case you're wondering, there are TWO SOL time frames--one is the time frame of the debt itself. And the other is how long it can stay on your credit report. :D Shirley

Before you pay any debt, it is always necessary to check the SOL in the state where the account took place. If the statutes have expired, you are not legally obligated to pay the debt and no actions can be taken against you. However, if the accounts are paid off even after the statutes have expired, it will be updated in your file and improve your credit ratings.

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thanks David, I will remember that correct term when it comes to the 'stay' on the credit report. thanks for correcting me. :D Shirley

Not a problem, Shirley. Its exchange of ideas and it's always good for learning. I know you have so much interest in learning new things everyday. :D You are doing a great work!!

thank you so much David--I am really trying. I like learning new things for myself but mainly for the reason of being able to help others here. In helping others, I am helping myself. And if someone here can learn something from what I've been through, then all the more better. I am more than happy to share and try helping. thanks again for the kind words. Just a few words of encouragement can sometimes go far. more than you realize. hugs, shirley

It's a great feeling when we know someone so much committed towards what they are doing. Since we are known to all of us here online only, it's nice that SOMEONE CARES. Take care, Shirley

I have about three charge off accounts on my report and I want to clean up my score. It has been more than 7 years since the charge offs accured. I understand that they should fall off but if I pay them then it shows up again. Even though it is better if I don't pay it how does that make a difference?
Thanks,
MAry

Mary, read my previous reply in the other thread that you started. But according to this post, there is some change in my suggestion to you now. As these accounts are more than 7 years old, they are surely out of the statutes in your state. As per the FCRA laws, they should be removed from your credit report also. If you make a payment on this account, this account will come back to the legal collection period and its duration in your file will also get extended. At this situation, I will suggest you not make any payment on this account. This will make no difference to your credit even after you pay it. Because, this account is not required to remain in your file presently.

Place a dispute highlighting this item with the credit bureau. They will run an investigation with your creditors and review the date of reporting. After a check has been conducted, your file will be updated and you will receive a free copy at your mailing address.

When does the 7 years negative history gets taken off your credit report 7 years after you open the account or 7 years from the close of an account?

FCRA laws mention the negative information to stay in the file for a period of seven years. After this period, the account needs to be automatically deleted from the file. This period begins from the date of first delinquency in your account.

Though this negative remark can hurt your credit scores largely, but you can still do some repair to your file by paying off the account. For example, if an account has been sent to collection, credit scores will get lowered. But after paying the account, a 'paid collection' will be much better than an 'open collection.

A quick clarification if possible:

I had a CC that was charged off then sent to collections.
I settled with the collection agency, who now reports "paid collection" on my credit report. The original lender (the CC company) still shows charge off. Should this have changed to "paid charge off"? Since I paid the CA and not the CC company, does that make a difference? If the original lender should show "paid charge off", should I contest this by disputing it, or contact the CC company first?

Thanks in advance!

Hello,

I would like to get some clarification on this explanation.
If I've had a debt for about 2 years now and it's in collections, does that mean I have 5 more years until it goes off my credit report? and I don't have to pay the debt at all?
And what if I decided to pay the debt in payments this year? does that mean it will be on there for 7 years starting on the day I started making payments to the credit card debt?
Thanks!

If you start making payments on the card, It will start the 7 year reporting over if I understand correctly.

Vikingshelmut,

It seems the same account is listed twice in your report. It is an error. You have to dispute it with credit bureaus.

BTW, does it show charged-off with zero balance or anything else?

Quesik,

If you pay it in full, chances are it will be there for 5 years. But if you decide to pay it in installments the clock will be restarted.

Collecting agencies might try to collect even the account is not on your credit report or past SOL. Even they can bring lawsuit against you after 20 years. But if you appear in the court and show that SOL is over, you win it. They might be awarded a default judgment if you fail to appear in court.

Moreover, a paid account is always preferred than an unpaid account. However, if SOL is over and it is ready to go off of your report, it won't be a good decision to disturb the system.

Stanley,

Are you sure this is the case? I was under the impression that once a debt was sent to a CA, even if the debt is paid, you will be hit twice on your credit report, once from the CA and once from the original lender on your credit report.

As for the charge off info, this varies.
Equifax reports zero outstanding balance, and charge offs on two CC accounts I settled with their respective CA.
Experian reports the same two CC accounts with Past Due Ammounts equal to the original balance, which as I said was settled with their respective CA.

Oops, that last comment from Guest was from me! I forgot to log in!

well, I'm sure because I have disputed with the credit bureaus over this and won. I disputed that debt was being reported twice and they took one off, the collection agency one would come off. original creditor would stay on. I know this for a fact because I have done it. It is illegal for them to report the same debt twice and if they're reporting the original creditor and the collection agency for the same debt, then that's reporting twice and they can not do this. dispute it, they have to take one off. hope this has helped. shirley

Great, thanks for the good news Shirley and Stanley!

Yeah, so I have 2 credit cards reporting charge off, and both of their creditors reporting paid collection, so I can get two negative's removed!

One quick question, I had a student loan through Direct Loans, that was sent to collection through the US Department of Ed. Does the same rule apply? Only one should be reporting since it has been paid off?

I just want to say that I've been a forum member for 2 whole days, and already with everyone's help I've found numerous issues I can contest on my credit report!

This place rocks!

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The seven year reporting period begins with the date of first delinquency. That date is established by Congress as the date the account became delinquent and never again became current. Even if you make a payment here and there or partial payments, as long as the account was never brought current again, the date of first delinquency DOFD never changes. If an account is still on your reports after seven years from DOFD you can dispute with the credit bureaus as obsolete to have it removed.

Your credit report will not tell you what the DOFD is. You will have to write or call the credit bureau to find out what date the data furnisher is reporting for FCRA compliance date of first delinquency.

Paying a collection account will not help your credit scores. FICO does not care if it is paid or not paid or settled or not settled. A collection account hurts your score. If you are going to pay it, your best bet is to negotiate with the collection agency to pay in exchange for deleting their trade line from your report.

A paid charged off is no better than an unpaid charge off on your credit reports as far as your credit score goes.

The reporting period is seven years from the date the account first became delinquent and never again became current, according to the FCRA.

Whether or not the debt is collectible depends upon your state laws. In Mississippi, for example, the statute of limitations for unpaid credit cards and contracts is three years. After that, the debt is extinguished, meaning it is not collectible and collection efforts must cease or the collector is in violation of the law.

Other states have different statute of limitation laws, so you have to look those up to see how long it is in your state and if the debt is extinguished or not. Some states, the debt is still there, but you cannot be sued for it. If you are, you can tell the court the debt is past the SOL - statute of limitations - and the case will have to be dismissed.

Do not blindly pay any collections or charge offs on your report because they may not be yours. Always write for validation of the debt and remember if the collection agency cannot validate it, the law says they cannot continue to report it or try to collect on it. An debt that cannot be validated is not considered valid, according to federal law. No proof, no debt.

Guest, I can see your post full of information and well-constructed. Your expertise will definitely help community members solve their problems. Why don't you join this board? Registration is free here :D

I've been receiving calls from a Debt Collection Agency for a charge off account in 1994. I'm not sure about this account, but if is mine Do I still have to pay it?

This debt is now too old to be reported in your credit report, unless you have done a payment and renewed the SOL. Check your credit copy and find out if this CA is doing any unauthorized reporting. You should know the last payment date before writing a dispute letter to the CA mentioning the laws.

The loan i got for the car i had was 14,500.00! I did a voluntary repoe and in dec of o6!! They sold the car in feb 07 for 6100.00 and sent a letter to me stating that i owed balance of 9400.00 but they did a charge off on my credit for 14,500.00!! Is this legal!!

Sending you a bill for the remainder of the balance you owed?
Yes, the fact that you do not have the car anymore does not eliminate your debt, nor does the fact that they sold it for a loss.

Charging off a bad debt of $14,500?
Yes. A charge off does not mean that you don't owe the money anymore, a charge off means that they've moved the debt from one ledger to another ledger. They can persue the remaining balance themselves, hire a collection agency, or sell your debt, but you still owe the money.

Stating on your credit report that you still owe $14,500?
No. If this is the case, you would need to dispute the entry on your CR. It should reflect a balance due of $9,400, if that is what you owe now.

Keep us apprised of your situation, as we can be of assistance if they violate collection or other credit laws.

Also, please do not type in all caps, it makes posts difficult to read.

hi im new to this i am just trying to get some basic info on where to start i am trying to figure out how and when will the charge offs on my report be taken off.

As I understand it, 7 years, 6 months from the date of charge off.

hello everyone.

here is my problem, i have 3 credit cards all are charged off as bad debt and revolving.
capital one - $518
Citi - $1250
Commerce bank- $1773 all happened in my student years in 2003. since then i never used a credit card and now my score is 550. i want to clear this all and increase my credit score and hstory. rite now i have a job and i can pay all the three cards in full and in one payment immediately. i want to know what are my options to increase my credit score and history?

1) should i pay it off in full (will it improve my score and history)
2) consolidate my debts? (since paying in full wont improve my score or history, atleast i can reduce the amount)
3) anything else i can do?


any help will be appreciated. thanks

1) I believe PIF looks best, on any negative entry. Perhaps you could even negotiate a pay for delete. You'd offer to pay the account in full, in exchange, they agree to delete the entire entry. Whatever you do, make sure you get in writing.

2)I've heard that consolidation can lower your score, but when everything is paid off, your score gets a boost. I understand consolidation to be a company that negotiates with your creditors to lower interest rates, possibly even wave late charges.

3)Go over your credit report with a fine tooth comb, and dispute any inaccurate entries.

Hopefully, someone else will come along shortly and give you more input.

thanks for your reply

i am thinking of writing a letter to capitalone first, so u have a sample letter which i can use? also if i send the letter to them how long will the whole process take (until they remove the charges from the credit report or write as paid as agreed)?

and how muh will my score increase? my current score is 550. thanks

You might find what you need here, in these templates.

How long can delinquent credit card accounts accrue interest? It's been close to 7 years and the total balance keeps growing due to interest. Can I get a lawsuit against me even after the 7 years and do I have a chance to win it? Thanks for any advice!

Have you check what the statute of limitations is in the state that you live in? That is the first plsce to start.

Yes, I have. It is 5 years, which is why I was confused. The most recent letter from the lawyer stated that they may be taking me to court, but the SOL has clearly expired.

My biggest concern is the interest. How long does the interest on a credit card accrue? Is there some type of limit on that imposed by the state or will it keep increasing for the rest of my life?

Thanks!

I have a really bad credit score and report. As most people, I went through a hard time, lost my job and now I am in really bad debt.Do you recommend, I try to get a loan under my moms name and pay the amount in full or should I just pay off each account one by one? Also in my Equifax Credit Report, is the balance that is shown correct and up to date of what I owe, or are there some balances that may not be there? Please let me know. thank you.

Hi CCCP

In my opinion do not take a new loan to pay off another one. It is like robbing Peter to pay Paul.

When did u check your credit report last?

Nelly