Posted on: 24th Nov, 2005 12:39pm
When you're unable to pay off a debt, the creditor may issue a credit charge off. A charge off doesn't mean that the debt is cancelled or forgiven. It's not that you no longer owe the debt. Credit charge off implies that the unpaid debt will be reported as the creditor's loss when he uses accounting methods for tax purposes.
The creditor may feel that he cannot collect the debt from you; he may write off the account as a bad debt. But he doesn't lose the right to collect the debt. And, even if the creditor does not try to collect an unsecured debt (like credit card, personal loan, etc), he may sell it off to a collection agency (CA), which will then set off to collect the debt.
The creditor may feel that he cannot collect the debt from you; he may write off the account as a bad debt. But he doesn't lose the right to collect the debt. And, even if the creditor does not try to collect an unsecured debt (like credit card, personal loan, etc), he may sell it off to a collection agency (CA), which will then set off to collect the debt.
How to remove charge off from credit report
Usually credit charge off occurs when payments aren't made for more than 6 months. And, it does have a negative impact on your credit report as it stays on the report for 7 years and 180 days from the date of first non-payment of debt. So, what you need to do is, negotiate with the collection agency and try to remove the charge-off from your credit report.
If the creditor has charged off your loan recently, then request him to pull back the debt from the collection agency. Explain that you wish to deal with the creditor directly. Once the debt is pulled back, you can negotiate with creditor to settle the debt for as much as you can pay. You should also negotiate a pay for delete agreement such that even though you don't pay mortgage balance in full, the lender would communicate with the bureaus and have all information on the account removed from your report. If the creditor doesn't want a pay for delete agreement, then request him to update your account status as "Paid charge off".
However if you try to settle the debt by making a partial payment, then the creditor may report it as "Settled Charge off". A "Paid" or "Settled" charge off on a mortgage debt helps to remove the lien from the house title.
If the creditor has charged off your loan recently, then request him to pull back the debt from the collection agency. Explain that you wish to deal with the creditor directly. Once the debt is pulled back, you can negotiate with creditor to settle the debt for as much as you can pay. You should also negotiate a pay for delete agreement such that even though you don't pay mortgage balance in full, the lender would communicate with the bureaus and have all information on the account removed from your report. If the creditor doesn't want a pay for delete agreement, then request him to update your account status as "Paid charge off".
However if you try to settle the debt by making a partial payment, then the creditor may report it as "Settled Charge off". A "Paid" or "Settled" charge off on a mortgage debt helps to remove the lien from the house title.
SOL and credit charge off
As long as the SOL (Statute of Limitations) period exists, the creditor/collection agency can file a lawsuit against you and try to retrieve the unpaid debt, even after charge off. But after the SOL period (4 to 6 years, varies from state to state) expires, there'll be no lawsuit against you but the creditor or collection agency still has the right to collect from you. However, if debtors make a written promise to pay off the debt or make partial payment after the SOL expires, then in many states, the SOL starts over again.
If you have a charge off on your credit report and wish to get a mortgage, the lender would expect you to pay it off and then go for the mortgage. This is because a mortgage charge off implies there is still a lien existing against the title and the lien can only be removed once it is paid off.
If you have a charge off on your credit report and wish to get a mortgage, the lender would expect you to pay it off and then go for the mortgage. This is because a mortgage charge off implies there is still a lien existing against the title and the lien can only be removed once it is paid off.
Can I get some information on Charge Offs?
we started a bankruptcy but requested it be dismissed but still volluntarily surrendered a boat. The bank claims we owe 21,000 and have agreed to a monthly payment of $100.00 but they continue to report the loan as CO and late. What is our best option?
i don't know that you have any options in this situation. a voluntary repossession is still a repossession, and it results in a charge off on the part of the lender. i will assume that you are taking steps to verify the debt you owe to the bank, if they haven't already documented the balance of $21K. you need to know the disposition of the boat, and what kind of proceeds they received, assuming they've sold it. i doubt very much they'll be amenable to changing their method of credit reporting.
i settled with my mortgage company on my second mortgage 19 months ago when i had to short sale my house. how long will this affect my credit? i know it can stay on my report for 7 years but will it affect the report the same amount the whole 7 years. is there some calculation the credit bs use as time goes on with no other neg items? this has affected my scores from 40 to 100 points.
thanks
thanks
A department store charged off a debt back in 1995 (15 year ago). I just got a letter today that said I could pay off the debt through a voluntary program? If it is voluntary why do they say I need to pay it off? This was 15 years ago and I don't want to enter into any type of settlement program since the statue of limitations has expired. What do I do and was this letter a fraud since it came from a debt settlement company?
I suppose you could ignore the invitation to pay it off, but that won't stop them from bothering you. I don't expect you want to pay off this debt, of course, but is it actually money owed? It's best you contact your own consumer protection department to determine the statute of limitations and the effect on you, or contact ftc.gov to get their take on things.
I lost a job, stopped paying my mortgage, and then filed bankruptcy. I kept my condo and let go of the house. The mortgage lender started foreclosure on the house and then asked the judge to dismiss it. Their lawyer told me that they are doing a charge off and consider the debt uncollectable. They feel that it would cost too much for them to foreclose. The value of the house went from $110,000 to $20,000. I saw a similarhouse on their foreclosure list for $11,500. What does this mean?
Hi pamolina,
If the lender charges off the account, then the collection agency will be able to come after you in order to recover the dues. The lender won't take any further actions against you.
If the lender charges off the account, then the collection agency will be able to come after you in order to recover the dues. The lender won't take any further actions against you.
The bank just has made my 2nd mortgage charge off. Since now the 2nd loan is an unsecured debt, Can I filed a BK7 and get rid of the 2nd with my other credit card debts and keep my house?
Hi Zobeida,
You can file Chapter 7 and get rid of the charged off mortgage along with your credit card debts. It is true that though you file Chapter 7, you will be able to keep your property.
Thanks
You can file Chapter 7 and get rid of the charged off mortgage along with your credit card debts. It is true that though you file Chapter 7, you will be able to keep your property.
Thanks
We just finished a short sale a few weeks ago and were unable to reach a settlement with the 2nd mortgage. They released the lien, but reported the short sale as "bad debt, placed for collection." We intend to contact the bank to try to now reach a partial settlement. Their original reporting has resulted in a 67 point drop on our credit score. Can we expect our score to bounce back up some once we settle? Would it then be reported as "settled-charged-off"? Thanks for the information.
Hi Guest,
Your query has been replied to in the given page:
http://www.mortgagefit.com/credit/chargedoff-2ndloan.html
Take a look at it. Hope it helps you.
Thanks
Your query has been replied to in the given page:
http://www.mortgagefit.com/credit/chargedoff-2ndloan.html
Take a look at it. Hope it helps you.
Thanks
I have a charge off on my credit report but I am a co signer on it and now I am trying to purchase a home and the mortgage rep is demanding a letter from me stating i'm co signer and the debt is charged off could this effect my chances of purchasing my home?
Welcome Guest,
A charge off on your credit report may affect your chances in purchasing a loan. The lender may ask you to pay the charged off account first and then apply for a loan.
A charge off on your credit report may affect your chances in purchasing a loan. The lender may ask you to pay the charged off account first and then apply for a loan.
I have settled my accounts and they are showing as charge off, is their anyway to remove it............i have the settlement letters saying they would update to paid as settlement. What should i do
Hi Guest,
As you've a letter stating that the charged off item will be updated in your credit report as paid as settlement, then you need to contact the collection agency and ask them to take actions regarding the same.
Thanks
As you've a letter stating that the charged off item will be updated in your credit report as paid as settlement, then you need to contact the collection agency and ask them to take actions regarding the same.
Thanks