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?
Hi KS!
Welcome to forums!
Your query has been replied to in the given page:
http://www.mortgagefit.com/credit-rating/about51394.html
Please take a look at it. I hope it will help you.
Sussane
Welcome to forums!
Your query has been replied to in the given page:
http://www.mortgagefit.com/credit-rating/about51394.html
Please take a look at it. I hope it will help you.
Sussane
After being a bit behind in my mortgAge payments . I had made payment arrangements with my mortgage company. I was following my agreement and had been making the payments without fail on time and the agreed upon amount. I then get a notice from another mortgage company telling me that they had purchased the loan and that they were going to
Begin foreclosure process. I attempted to
Work with them and continued making my payments. It has been Almost a year . I've never received anymore regarding the foreclosure but when I received a late tax notice the company had failed to pay my taxes on the house. I contacted the mortgage company who said that all
My payments were going to the principal and that I was considered a
Charge off. Is this legal and what can I do at this point.
Begin foreclosure process. I attempted to
Work with them and continued making my payments. It has been Almost a year . I've never received anymore regarding the foreclosure but when I received a late tax notice the company had failed to pay my taxes on the house. I contacted the mortgage company who said that all
My payments were going to the principal and that I was considered a
Charge off. Is this legal and what can I do at this point.
Hi Amanda!
Welcome to forums!
If you have an agreement with the lender, then he cannot sell off the loan to some other mortgage company. In my opinion, you should contact a real estate attorney in this regard and try to clarify the whole matter.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If you have an agreement with the lender, then he cannot sell off the loan to some other mortgage company. In my opinion, you should contact a real estate attorney in this regard and try to clarify the whole matter.
Feel free to ask if you've further queries.
Sussane
If a lender is willing to negotiate your debt down on foreclosed property to reflect paid in full, is this what the borrower should do? It has been 2.5 yrs since the first non payment and the Statute of Limitations in Texas is 4 yrs I think. Should the borrower pay an 80% reduction to the debt or just wait till the Statute of Limitations to run out and drop of the credit report in a yr and a half? If this is an accurate account of how all this works?
Hi Trevor!
Welcome to forums!
If the lender is forgiving the deficient balance, then it is good for you. However, you will be liable for paying taxes for the deficient balance that has been forgiven. But due to the Mortgage Debt Relief Act, you may not have to pay the taxes for the forgiven debt.
However, like any negative item, it will be mentioned in your credit report for the next 7 years.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If the lender is forgiving the deficient balance, then it is good for you. However, you will be liable for paying taxes for the deficient balance that has been forgiven. But due to the Mortgage Debt Relief Act, you may not have to pay the taxes for the forgiven debt.
However, like any negative item, it will be mentioned in your credit report for the next 7 years.
Feel free to ask if you've further queries.
Sussane
what if the property is included in a bankruptsy?
Hi cwing!
Welcome to forums!
If the property is included in the bankruptcy filing, then you'll get a discharge from the mortgage that you have on the property. If the mortgage is charged off, then you will be able to get rid of the charged off debts as well.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If the property is included in the bankruptcy filing, then you'll get a discharge from the mortgage that you have on the property. If the mortgage is charged off, then you will be able to get rid of the charged off debts as well.
Feel free to ask if you've further queries.
Sussane
my house was forclosed on last year and i got cash for keys from the bank now I get a letter from a collection agency stating that I owe 200,00 what do I do am i liable for this?
Welcome cheryl,
After a foreclosure, the lender may come after you in order to recover the deficient balance. In your case, the lender has charged off the debt and assigned it to a collection agency. You can ask the collection agency to validate the debt so that you know that they really own your debt. Once they validate the debt, you will have to set up a payment plan with them in order to pay off the debts.
After a foreclosure, the lender may come after you in order to recover the deficient balance. In your case, the lender has charged off the debt and assigned it to a collection agency. You can ask the collection agency to validate the debt so that you know that they really own your debt. Once they validate the debt, you will have to set up a payment plan with them in order to pay off the debts.
$200K sounds awfully large to me. Cheryl, what were the particulars about the foreclosure? How much did you owe them, and do you know if they've disposed of the property? If so, do you have an idea how much it sold for?
Target National Bank is bringing suit against me in Florida following a charge off that occurred in 2008. Target has already taken the tax deduction. Is Target still legally able to sue me for the amount they claim I owe.
Norma, I have to ask you first of all how you would have knowledge that Target has taken a tax deduction that's related to your account.
As far as their rights as a creditor, if you defaulted on a debt and didn't pay back anything in the interim, they have every right to seek a judgment against you by suing.
Any claim they make about what you owe is fair game for you to deny and try to prove otherwise...in other words, you'll have your day in court if they sue.
As far as their rights as a creditor, if you defaulted on a debt and didn't pay back anything in the interim, they have every right to seek a judgment against you by suing.
Any claim they make about what you owe is fair game for you to deny and try to prove otherwise...in other words, you'll have your day in court if they sue.
who should i deal with the creditor or collection agency
Can I make pay on the loan if i settled
Hi slimmy!
Welcome to forums!
If your debt has been charged off and assigned to a collection agency, then you will have to deal with the collection agency in order to get rid of the debts. However, if your account is still with the creditor, then you should contact the creditor and set up a re-payment plan with him.
You will be able to make the payments on a loan even though you've settled another debt.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If your debt has been charged off and assigned to a collection agency, then you will have to deal with the collection agency in order to get rid of the debts. However, if your account is still with the creditor, then you should contact the creditor and set up a re-payment plan with him.
You will be able to make the payments on a loan even though you've settled another debt.
Feel free to ask if you've further queries.
Sussane