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?
can i file bankruptcy on my second mortgage that is already in collection?
Welcome Myrna,
You will be able to file bankruptcy and include the second mortgage which is in collections and get it discharged.
You will be able to file bankruptcy and include the second mortgage which is in collections and get it discharged.
I have never missed a payment. I took a second mortgage for $100,000 to open a business with bad advice from my former accountant. Due to the financial crash I was unable to pay off the complete amount on the second. I negotiated with the bank to settle the $98,000 owed for $45,000 due to loss of employment and my business is struggling. Will I have to pay taxes on the 1099 and can I get the ding on my credit removed since I settled the second mortgage with bank? My credit score is 702. I want to emphasize I have never missed a house payment. Fortunatley I just got employed and my credit is important in the line of work I am in. -Do I qualify Hardship to avoid taxes on the 1099? I chose this route because bankruptsy was not an option due to the nature of my employment.
Hi Michael,
If a mortgage balance has been forgiven by the lender, then IRS will consider this as your income and you'll be liable for paying taxes on that amount. As you're settling your debts and paying less to your creditors, it'll have a negative affect on your credit report.
If a mortgage balance has been forgiven by the lender, then IRS will consider this as your income and you'll be liable for paying taxes on that amount. As you're settling your debts and paying less to your creditors, it'll have a negative affect on your credit report.
I had a large credit card debt that went to a collection agency and listed as a charge off by the original creditor. I worked diligently with that agency to make a monthly payment schedule I could afford.
After about two years of payments, the agency offered me a settlement. I accepted and reported the write off as income on my taxes per law.
My question is, is this debt now considered settled? After reading these boards I worry the agency may have the right to come back on me for the rest of the payment. That would stink.
Thanks for your time and help
After about two years of payments, the agency offered me a settlement. I accepted and reported the write off as income on my taxes per law.
My question is, is this debt now considered settled? After reading these boards I worry the agency may have the right to come back on me for the rest of the payment. That would stink.
Thanks for your time and help
Hi Guest,
If the collection agency has settled the debt and reported the same to the credit bureaus, then your debt will be considered as settled. Once the debt is settled, the collection agency will not be able to come after you.
Thanks
If the collection agency has settled the debt and reported the same to the credit bureaus, then your debt will be considered as settled. Once the debt is settled, the collection agency will not be able to come after you.
Thanks
Thanks so much for the info, James.
I rechecked my credit report and the collection agency was never listed though the debt was listed by the original holder as a charge off.
HOWEVER, the report now has the creditors statement that the account was legally paid in full for less than full balance and shows all the payments made up until that agreement. At first the only thing it showed was the writeoff, which was much, much higher than the final agreement. Has my Vantage score at 752, which while a mid-C, probably much more than before.
I rechecked my credit report and the collection agency was never listed though the debt was listed by the original holder as a charge off.
HOWEVER, the report now has the creditors statement that the account was legally paid in full for less than full balance and shows all the payments made up until that agreement. At first the only thing it showed was the writeoff, which was much, much higher than the final agreement. Has my Vantage score at 752, which while a mid-C, probably much more than before.
Hi,
I was wondering if a bill collector is allowed to submit information to my credit reporting agency stating that my debt is "bad debt-charged off" which places it in a negative standing if I already made a monthly payment agreement and have been making payments to them faithfully each month for the last two years? I just think that it is unfair that I owned up and was responsible enough to work something out with them to make payments that it should have a negative standing on my credit report? Is there anything I can do in order for them to put something on my credit report such as "paying as agreed" to help me?
I was wondering if a bill collector is allowed to submit information to my credit reporting agency stating that my debt is "bad debt-charged off" which places it in a negative standing if I already made a monthly payment agreement and have been making payments to them faithfully each month for the last two years? I just think that it is unfair that I owned up and was responsible enough to work something out with them to make payments that it should have a negative standing on my credit report? Is there anything I can do in order for them to put something on my credit report such as "paying as agreed" to help me?
Hi Angel,
All your creditors have the rights to report to the credit bureaus. A charge off will be considered as a negative mark on your credit report. If you pay off the dues as per a payment plan, the creditor will report it as paid as settled.
Thanks
All your creditors have the rights to report to the credit bureaus. A charge off will be considered as a negative mark on your credit report. If you pay off the dues as per a payment plan, the creditor will report it as paid as settled.
Thanks
I have a second mortgage charge-off that have been on my credit report since 2001, on one of my old credit reports it stated that it was to be removed by 5/2008. in which it was and now its back as 0f 7/2010 for 7 more years. can they do this after the first seven years and how. what leverage do they have now.
Hi boomerang!
Welcome to forums!
The charged off account will be mentioned in your credit report for 7 years since the day the lender declared it as "charged off". You should contact the credit bureaus and check out the matter. You may even dispute the item and remove it from your credit report.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
The charged off account will be mentioned in your credit report for 7 years since the day the lender declared it as "charged off". You should contact the credit bureaus and check out the matter. You may even dispute the item and remove it from your credit report.
Feel free to ask if you've further queries.
Sussane
How long can the credit reporting agency keep reporting on your credit reort? In Louisiana it is 3 years and then it becomes time borrowed debt. which means that they (credit card company) cannot file a lawsuit against you. How to get chase bank from reporting you late.
Hi windy,
Any negative account will remain in your credit report for the next 7 years. However, the SOL period may vary from state to state. The SOL period for any open ended account in Louisiana is 3 years. After 3 years, the lender cannot take any legal actions against you.
Take care
Any negative account will remain in your credit report for the next 7 years. However, the SOL period may vary from state to state. The SOL period for any open ended account in Louisiana is 3 years. After 3 years, the lender cannot take any legal actions against you.
Take care
I had a short sale in October of 2010, and it was agreed that I would pay a “promissory note.†I recently checked my credit report, and noticed that the mortgage company reported to the credit bureau "settled for less than full balance." I also noticed on the Experian Report it shows “Charge Off.†Do you know what I need to do to remove the Charge Off to show “paid off?
I had a short sale in October of 2010, and it was agreed that I would pay a I recently checked TransUnion report, and noticed that the mortgage company reported to the credit bureau , but I dont see the promissory note reported. CBCInnovis shows settled for less than full balance. Do you know what I need to do have both the charge off and settled for less than full balance removed?