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?
Rental property went into foreclosure in 1998. Stopped making payments in June of 98. First lender took over sold property, second lender out of luck.
Tried to collect from me. Did not pay. IN 2002 they sent me a 1099, I declared bad loan amount as income on taxes. Since then this bad loan has been sold three times. SOL is past. No recourse legally. Recently I checked my credit report and Greentree now owns the bad loan and has charged it off. The original loan was reported to the credit agency in 1998.
Can Greentree report it again? It has been 11 years since the first time it was reported to the credit agencies. Why do they continue to report it? It has exceeded the 7 year period?
I have sent a letter to the credit agency asking to explain why it is on my report. It is still less than 30 days since I sent letter. I am pretty sure they will contact Greentree or look it up on their lame database and say it is valid. How do you remove this charge off from credit report? The 7 year period has been exceeded. What are my rights under the FCRA?
Tried to collect from me. Did not pay. IN 2002 they sent me a 1099, I declared bad loan amount as income on taxes. Since then this bad loan has been sold three times. SOL is past. No recourse legally. Recently I checked my credit report and Greentree now owns the bad loan and has charged it off. The original loan was reported to the credit agency in 1998.
Can Greentree report it again? It has been 11 years since the first time it was reported to the credit agencies. Why do they continue to report it? It has exceeded the 7 year period?
I have sent a letter to the credit agency asking to explain why it is on my report. It is still less than 30 days since I sent letter. I am pretty sure they will contact Greentree or look it up on their lame database and say it is valid. How do you remove this charge off from credit report? The 7 year period has been exceeded. What are my rights under the FCRA?
check out the federal trade commission's website at ftc.gov. there, you'll find copious information on your rights, the responsibilities of both creditors and credit reporting agencies, and methods by which you can correct erroneous information.
it sure does seem like you've been long since past time for this to be eliminated.
it sure does seem like you've been long since past time for this to be eliminated.
I did a debt consolidation 2 1/2 years ago from BOA, they put the money into my checking accout at my credit union. The terms were 6 years at 500.00 per month. But after 6 months they raised the interest rate until it would have taken me 20 years to pay off. I quit paying and they falsified checks in my name for payment at my credit union. Is this legal? Thanks
what you describe doesn't sound good, but then again you defaulted on the loan. they have a right to collect payments from you. there's too little data here to say they did anything wrong or not.
Stephanie - it doesnt sound legal but you will need to find a contract attorney to see if they were in the wrong.
If you signed a document stated that they automatically draft money from your account, then NO they are not in the wrong. Usually the drafts create a check made payable to the person with a long or high number for the check number
If you signed a document stated that they automatically draft money from your account, then NO they are not in the wrong. Usually the drafts create a check made payable to the person with a long or high number for the check number
We purchased our home in 2005 for $192,000. We put $40,000 down and borrowed $152,000. The bank agreed to a short sale and stated we owed $149,000. The bank allowed the property to sell for $105,000. We signed a note with the bank, (the actual bank, not a collection agency), for $38,000 at 5% for 20 years. I now have a copy of my credit report that states this loan was "charged off" for $51,298. I need to know how they can charge off this amount with the IRS and then turn around and have me pay back $38,000 of it at 5%? Is this legal or has the bank committed mortgage fraud in this "win-win" situation? We have made three payments to this loan and there is no mention of it on our credit report. The charge off is dated 11/09 so the bank has had time to mention that we are paying them back. Thank you so much for your time in this matter.
well, sabrina, i can't explain their accounting because i'm not privy to their methods, but here's my initial take:
the $51,298 may include interest, late charges, fees, etc.; if you do the math, it would seem to be closer to $44000 (149K - 105K). you ought to go back and ask for an accounting from them to determine where that number comes from.
do you have documentation indicating that they alerted the irs to the higher total? i'm thinking they didn't do that, as a charge off is really an accounting function - it's a former asset that is no longer earning money and is, therefore, "charged off" their books.
i think you need to be in conversation with them about the reporting, the non-reporting of your payments under the new note, and what precisely was sent to the irs (you ought to have a copy anyway).
the $51,298 may include interest, late charges, fees, etc.; if you do the math, it would seem to be closer to $44000 (149K - 105K). you ought to go back and ask for an accounting from them to determine where that number comes from.
do you have documentation indicating that they alerted the irs to the higher total? i'm thinking they didn't do that, as a charge off is really an accounting function - it's a former asset that is no longer earning money and is, therefore, "charged off" their books.
i think you need to be in conversation with them about the reporting, the non-reporting of your payments under the new note, and what precisely was sent to the irs (you ought to have a copy anyway).
Hi again, thank you for your answer. Basically, the bank stated that the charge off will remain on the credit report until the new note is paid in full. (20 years!) They also stated that it is their choice whether or not to report the new note which specifically states it is the agreed amount to pay off the previous mortgage. I don't think this is fair due to the fact that they agreed to the short sale and we are still paying them. This is also not fair to other lenders as the new note will not show up on my credit report for accurate debt to income ratios. I also asked them if the charge off would change in 20 years as the $38,000 does not meet the complete obligation. The collection manager stated he didn't know! That means they can put another charge off on my credit report in 20 years! I don't think they know what they are doing. The corporate bank is taking advantage of those who are trying to do the right thing and negotiate payments toward the debt.
In other words, this bank is not going to mention on our credit report that we are paying them back! The charge off is on the credit report, but it is not being reported to the IRS. It almost seems that we should have refused to sign a note and let them 1099 us. There are no fees involved except closing costs due to the fact that we were only 30 days behind when the house was sold.
In other words, this bank is not going to mention on our credit report that we are paying them back! The charge off is on the credit report, but it is not being reported to the IRS. It almost seems that we should have refused to sign a note and let them 1099 us. There are no fees involved except closing costs due to the fact that we were only 30 days behind when the house was sold.
i think you need to escalate your conversation beyond the collection manager, too. his supervisor - maybe the next person's supervisor, and up and up.
we find in a lot of cases, no matter what kind of corporation it is, that the ceo has no clue what his lower echelon folk are telling consumers. there may, indeed, be a plan in place to handle you with reasonableness, but unless it gets communicated properly to the people on the firing line, it falls apart. your collection manager is probably overwhelmed anyway, and feeds just enough information out to whoever he speaks with to get rid of them quickly (mind you, this is all just speculation on my part).
i suggest you call them back, no matter what, and seek someone with higher authority to speak with, and keep that up as long as necessary - until you achieve what you're seeking or your nerves get utterly frazzled, whichever happens first.
we find in a lot of cases, no matter what kind of corporation it is, that the ceo has no clue what his lower echelon folk are telling consumers. there may, indeed, be a plan in place to handle you with reasonableness, but unless it gets communicated properly to the people on the firing line, it falls apart. your collection manager is probably overwhelmed anyway, and feeds just enough information out to whoever he speaks with to get rid of them quickly (mind you, this is all just speculation on my part).
i suggest you call them back, no matter what, and seek someone with higher authority to speak with, and keep that up as long as necessary - until you achieve what you're seeking or your nerves get utterly frazzled, whichever happens first.
Thank you Mr. Akerley, it does appear that they are being unfair. I will continue my quest for "good faith".
you're so welcome sabrina - keep us posted please
I have a charge off from a credit card that was paid off. It states on the report that it was legally paid for less than owed. Can the credit card company list this agreement and still post a charge off when the balance was paid? How can I get this removed?
Hi Ray!
Welcome to forums!
A charge off is a negative mark and will stay in your credit report for the next 7 years. It is good that you have paid off the dues. This will lower the negative impact on your credit score. But I don't think you would be able to remove it.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
A charge off is a negative mark and will stay in your credit report for the next 7 years. It is good that you have paid off the dues. This will lower the negative impact on your credit score. But I don't think you would be able to remove it.
Feel free to ask if you've further queries.
Sussane
Hi, here is an update to the "inaccurate" charge off which was applied to our credit report. It appears that the bank is in violation of the fair and accurate credit reporting act. I am currently researching this and the bank finally returned my call but I was not home at the time. I have the address of Thrift Supervision in Washington, DC and this information was given to me by the Attorney General. I know that I am probably not the first person that this bank has not been honest with, but I am hoping that I will be the last. The bank also failed to notify me of this adverse action to be applied to my credit report and I understand that there is a set fine for this lack of notification. It does appear that the corporate giants are trying to take advantage of the consumers and we need to stand up for our rights. I am finding all this information through research on the web and will not stop until I am proven wrong or until the bank corrects their mistake. My question to you is this... Is it possible when requested, to get a copy of a bank's short sale policies? I have requested that among other things such as the actual disclosure which states how they came up with the amount owed. It still blows my mind that they agreed to the short sale, and the note for $38,000 which specifically states it is to cover the mortgage for the property. Then they do not even mention that I have been paying and have that note with them on my credit report. I believe that they have violated the fair and accurate credit reporting act in many areas. I shall keep you posted, even if I am proven wrong.
sabrina, i'd be pretty surprised to learn that they'd share their policies with you. in fact, i'd be surprised if the office of thrift supervision forced their hand in so doing - policies are changeable, of course, and they are typically meant only for the eyes that need to see them - the employees who use the policies to do their jobs.
you can certainly request their policies, and you may be successful, given that you've found assistance on a supervisory level. and, of course, if your case were to end up in court, it would never surprise me to see a judge order that they be turned over to you.
honestly, nothing that a judge does in any court in this country ought to come as a surprise to any of us. there are some wacky people walking around in courtrooms wearing robes.
you can certainly request their policies, and you may be successful, given that you've found assistance on a supervisory level. and, of course, if your case were to end up in court, it would never surprise me to see a judge order that they be turned over to you.
honestly, nothing that a judge does in any court in this country ought to come as a surprise to any of us. there are some wacky people walking around in courtrooms wearing robes.