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 ironbutterfly,
The SOL for such debts in California is 4 years. The debt will not be forgotten by the lender. Rather, the lender won't be able to take any legal actions against you after the SOL period is over. However, the non-payment of credit card debt will remain mentioned in your credit report. When you apply for a new credit, there are chances that your new creditor will ask you to pay off the debts.
The SOL for such debts in California is 4 years. The debt will not be forgotten by the lender. Rather, the lender won't be able to take any legal actions against you after the SOL period is over. However, the non-payment of credit card debt will remain mentioned in your credit report. When you apply for a new credit, there are chances that your new creditor will ask you to pay off the debts.
If a debt is sold to a collection agency, is the original creditor no longer involved?
I ask because I'm receiving letters with headings that state Current creditor, and Original creditor.
Who am I supposed to pay?
I ask because I'm receiving letters with headings that state Current creditor, and Original creditor.
Who am I supposed to pay?
Welcome troll,
The original creditor won't be involved once the debt is charged off and assigned to a collection agency. If the debt has been sold off to the collection agency, then you will have to pay the debt to the collection agency and not to the original creditor. I will suggest you to immediately contact the original creditor whether or not they have sold off the account to a collection agency. If not, then you will have to contact the credit bureaus and remove the charged off status from your credit report.
The original creditor won't be involved once the debt is charged off and assigned to a collection agency. If the debt has been sold off to the collection agency, then you will have to pay the debt to the collection agency and not to the original creditor. I will suggest you to immediately contact the original creditor whether or not they have sold off the account to a collection agency. If not, then you will have to contact the credit bureaus and remove the charged off status from your credit report.
Is it legal for interest to continue to accrue on a charged off account.
HI Guest,
Yes, interest can get accrued on a charged off account if you do not take steps to pay off the debt soon.
Thanks
Yes, interest can get accrued on a charged off account if you do not take steps to pay off the debt soon.
Thanks
our second mortgage is now in collections. other than the initial communication that told of fees that equalled half the actual debt, the ca will not put anything in writing for us. do we have any rights to demand information in writing? it feels like we could be paying into a bottomless pit. at one point they said, "make an offer." but i don't trust what i they're not willing to put in writing. your thoughts?
Hi Guest,
Yes, you do have the rights to demand information from the collection agency in writing. Unless you get the things in writing, you shouldn't start making any payments to them.
Thanks
Yes, you do have the rights to demand information from the collection agency in writing. Unless you get the things in writing, you shouldn't start making any payments to them.
Thanks
my husband & i filed bankruptcy a few years ago. during this process, our mobile home mortgage was charged off. we now, would like to look into purchasing a home. how will that charged off loan affect us to buy a house. what happens if i walk away from the mobile home.
If you walkaway from the property, it will be foreclosed. After a foreclosure, you need to wait for 3-4 years in order to qualify for a loan. So, it won't be a good option to walkaway from the property.
i had a voluntary repo. about 15 years ago haven't been contacted in about 8 years, what is the statue of limitation on this?
Hi richmore,
As far as I know, in Maryland, written contracts have a SOL period of 3 years and promissory note has a SOL of 6 years.
As far as I know, in Maryland, written contracts have a SOL period of 3 years and promissory note has a SOL of 6 years.
If I was a co-signer on a loan, my son did'nt repay and I was unaware of, and is now a charge off, can I get that removed from my credit report? I am trying to purchase a home and was denied a loan due to this charge off.
Hi Trish!
Welcome to forums!
You won't be able to remove it from your credit report. As you were the cosigner for the loan, you will be equally liable for its payment. You will have to pay it off in order to remove the negative item from your credit report.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
You won't be able to remove it from your credit report. As you were the cosigner for the loan, you will be equally liable for its payment. You will have to pay it off in order to remove the negative item from your credit report.
Feel free to ask if you've further queries.
Sussane
this loan is charged off by creditor and now a collection agency is trying to collect almost 7,000.00 more than the loan was.Am I still responsible to them? the company cheated me and wouldn't negotiate and now they are what do I do and isn't the statute of limitations up?
this loan is charged off by creditor and now a collection agency is trying to collect almost 7,000.00 more than the loan was.Am I still responsible to them? the company cheated me and wouldn't negotiate and now they are what do I do and isn't the statute of limitations up?