Credit Card Center Advertiser Disclosure

New Visitor
Posts: 1
Registered: ‎10-01-2012
0 Kudos

Charged off but making payments. Need satisfaction letter.

 I am trying to get approved for a home loan and this charge off is causing an underwriting problem.  This particular Bank is very difficult to deal with. I ask them if they could give me a letter showing that I am current on an account of 158,000 since we settled at 78,000 and we make payments to them for 323.00 a month. The bank does not show that, so my husband and I decided there is no point in making any more payments to them since they are leaving it as a charge off.  Bank told me if we stop paying they will turn it over to collections. They might as well send it to collections. What are your thoughts? The 78,000 is not recorded so how could collections record it because it was already charged off.  Please advise.

Community Leader
Epic Contributor
Posts: 29,726
Registered: ‎03-19-2007
0 Kudos

Re: Charged off but making payments. Need satisfaction letter.

Two thoughts..

1. I agree with your bank for the most part, but in my opinion they do have one obligation that they apparently have not updated.... current balance on the debt.

2. Stopping payments may result not only in a collection, but legal action for default on contract if you have a written payment agreement with the creditor


 A charge-of was a one-time, internal bookeeping measure they took.  It was based upon two factors on their part: (1) the debt was delinquent, and (2) the delinquency had reached the point, usually 120 days, where they concluded that the debt had most likely become "uncollectible."  It does NOT "charge-off" the debt between the creditor and the consumer.  It charges off the debt internally in the creditors accounting register, moving it from a receivable asset to an uncollectible bad debt.

The entire amount is still owed, and they or their assigns/heirs can continue actions to collection the entire amount.


CRAs permit reporting of a charge-off to your credit file.  Acts subsequent to the fact of their internal business action, such as any partial of full payment of the debt, do not in any way alter the fact of their prior business decision at that prior point in time.  The charge-off properly remains as a statement of that fact, regardless of subsequent actions on the account.


When they reported the charge-off, they report the amount of debt at time of the CO.  However, should the consumer pay down the debt, as apparently is being done under your payment agreement, they should be updating the debt balance remaining.  The only inaccuracy I see is possibly a failure to timely report an update on the current balance of the delinquent debt.  Disputable, but easily correctible on their part.


Reducing the balance owed, however, does not mean the account is current.  It is not current until the delinquent debt becomes $0.  Thus, they are correct in decliing to provide a statement that the account is "current."


The entire debt is still legally collectible.  I would heed their warning as such.




Moderator Emeritus
Posts: 32,865
Registered: ‎08-04-2007
0 Kudos

Re: Charged off but making payments. Need satisfaction letter.

If I had that, I would continue to make the payments. Depending on your state, if you stop making the payments they can sue you for the full $150k because it would be a breach of contract. The reported payments should be the original mortgage amount, and not the $323 amount. If your new lender is making a fuss, maybe show them your settlement letter w/ this particular company? They probably want to know that it has been paid off vs. making payments on it. 


As far as the charge-off comment goes on your CR, the step that should have been taken is a PFD letter. In essence, it says that you'll agree to pay $x in exchange for a deletion, and that if they agree to that, they are to respond in writing. Once it is paid off, then they'll delete. It really is for the one-payment plan as opposed to monthly installments. There's no incentive to delete the bad references before it's paid.

Valued Contributor
Posts: 2,000
Registered: ‎04-07-2009
0 Kudos

Re: Charged off but making payments. Need satisfaction letter.

The account should be reporting as a chargeo off or Charge off now paying with a comment something to effect  of making payment(s) after charge off . The balnce should be the amount you owe.

Equifax My FICO score 814 11/29/2016, Discover TU FICO 807 12/29/2016 Citibank Equifax Bankcard FICO score 827 12/27/2016 Average of Accounts 13 years and no Installment accounts, 1 TU inquiry in 2015

Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.

† Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
‡ Credit cards for FICO Score ranges: The score ranges are guidelines based on internal myFICO analysis of actual applicant approvals, and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range. These ranges were not provided by any card issuer.

* For complete information, see the terms and conditions on the credit card issuer’s website. Once you click apply for this card, you will be directed to the issuer’s website where you may review the terms and conditions of the card before applying. While myFICO always strives to present the most accurate information, we show a summary to help you choose a product, not the full legal terms - and before applying you should understand the full terms of products as stated by the issuer itself.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.