Removing charge-offs from
a credit report
Dear Debt Adviser:
I had an accident a few years ago, which caused me to not
have enough funds to pay two credit card bills. Unfortunately, the
debt is now reported as a charge-off. I am in a better situation
now and would like to pay my debt in exchange for them removing
the negative marks from my credit report. Can you please advise
how I should do this to assure they remove the marks from my account?
I will not be satisfied if it just says paid account but still remains
as a negative mark. If they do not remove the negative marks, I
will have no incentive to pay them at this time.
Changing the past is a much more difficult undertaking than
changing the future. You say you failed to live up to two contracts
you had with credit card companies. You had a good reason, which
makes it understandable, but it doesn't mean it didn't happen. Lenders
need to rely on the accuracy of credit reports in order to properly
do their job of extending credit at a fair price and with appropriate
risks. Having charge-offs doesn't make you a bad person, but it
did happen and you will probably and justifiably have to learn to
live with that fact.
Still, there is nothing wrong with trying to plead
your case and negotiate a deal. The real incentive to pay what you
owe is that your word is your most valuable possession, not that
you will be removing the negative mark from your credit report.
You did not reveal how many years ago this took place. Keep in mind
that if your accounts are five or six years old, the negative marks
will drop off your report after seven years anyway. If this is the
case a little more time may solve part of your problem. Still,
that solution may be a bad one, because even if the debt is no longer
reported, it is still owed collection attempts may be made. Even the expiration of the statute of limitations in your state may not end collection efforts.
The creditor's main interest is getting paid. It is
likely that both of your creditors turned your accounts over to
a collection agency to attempt to collect the money due before the
accounts were charged off. Therefore, your credit report will reflect
a listing for the accounts from the original creditors and collection
Begin your negotiations to have the charge-offs removed
from your credit report with the collection agencies and follow
the tips below:
- All negotiations should be in writing. You will
likely need to begin on the phone to ascertain the correct person
with whom you should be negotiating. However, once you know who
that person is, send everything in writing and request they do
- Request that the creditor list your account as
"Paid as Agreed" or "Account closed -- Paid as
Agreed." Any other listing will be a negative mark on your
- Creditors list negative information on your credit
report as a business practice. It is not personal. Keep this in
mind when negotiating and use reasoning that makes business sense
to the creditor, not moral arguments.
- Negotiate with the collection agency to remove
their listing entirely from your report. A collection account
is a negative, whether it is "paid as agreed" or not.
Make sure you get this agreement in writing as well.
- Request that the collection agencies have your
original creditors change your account listings to "paid
as agreed." Do not pay anything to the collection agency
until you have an agreement in writing from your original creditor.
Once you pay, your power to negotiate ends.
- Large creditors may be less willing to delete a
negative listing from your credit report. If you must settle for
less than "paid as agreed," try to negotiate for "paid"
- Finally, there is one more thing to consider. Once
you start down this road, you are announcing that you have the
money to pay your past obligations. If the negotiations break
down, they may take you to court and force a judgment, which may
include interest, court costs and legal fees.
Good luck with the negotiations.
The Debt Adviser, Steve Bucci,
is the president of Consumer Credit Counseling Service of Southern
New England. Visit CCCS
for additional debt
advice or click
here to ask a debt question.
-- Posted: July 25, 2003