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Question about paying off chargeoffs

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deltagirl99
New Member

Question about paying off chargeoffs

I am desperately trying to rebuild my credit.

 

In 2009 I was laid off after the company I worked for, entered bankruptcy.

 

I could not find work for over a year and after going through nearly all my savings I had no choice either to lose my home or default on my credit cards.  At the time I also was behind 30 - 90 days on just about every other credit item in my name.  

 

Luckily I saved the home and a few months later I found work.  But the damage was done, I decended from a 780 credit score to now a 580.

 

For the last 16 months I have been on time and perfect payment history using newly opened Capital One card with a small credit line which I pay in full each month.

My outstanding credit is a fraction of what it used to be now with only my 1st mortgage a small loan and an auto lease.

 

All my equity is locked up in my home and I am trying to unleash some of that but I can only get a Harp refinance with no cash out, and cannot find any bank who will offer a line or equity line until my credit score increases to 620 (so I am told by my bank)

 

So my question is what is the best approach?  So far all my payments have been on time for the last 16 months.  That includes 2 loans that are now paid off
and a new car lease which has perfect payments for 9 months.

Approximately 7 accounts were charged off.  5 of those were Paid in full Settled for Less than owing, and the two remaining accounts I could not reach settlement agreements (Am Ex) with those two accouts for apprx 3K owing in total.

 

I could settle those 2 Am Ex accounts now, but it is my understanding that if I do, then the "clock" starts ticking again, and it would be 7 years more that they would be reported.  Given I am a little more than half way through the "drop off" period of all these negatives I dont see that as wise to pay these off.  In addition it is my understanding that even if I did pay them off, it may have little or no effect on my score.

 

This is the first time in my life that I have ever had bad credit, and it is very upsetting because I did everything the right way, refused to go bankrupt despite legal advice and did nothing except being caught up in this horrible downturn.

 

Finally, I would like to ask if any of those so called "credit repair" companies could help my situation.  I have pulled all my credit bureau files and sadly they are accurate.

 

Obviously I want to  get my life back to normal so any help to move me along to that 620+ range would be IMMENSELY appreciated.


Thanks you!

Message 1 of 6
5 REPLIES 5
llecs
Moderator Emeritus

Re: Question about paying off chargeoffs

Welcome!

 

For the ones paid or settled, try sending GW letters to those creditors either asking them to delete or asking them to remove the neg. info (settled comment, lates, or other negative info).

 

For the ones unpaid, mail each a PFD letter. If they agree in writing, then pay them and then they'll delete.

 

Paying a debt will not reset the 7-year clock. The 7-7.5 year clock is referenced in the FCRA which says that a debt like a CO can report for 7-7.5 years from the Date of First Delinquency (when you first went late and never recovered). Nothing can change that date and paying on a bad debt won't reset the reporting clock.

 

 

Message 2 of 6
deltagirl99
New Member

Re: Question about paying off chargeoffs

Thank You!

 

I will try everything that you mentioned.

 

A couple of follow ups if you could resond.

 

How to they define "First went delinquent"  For example if I was 30 or 60 days late then with them calling and calling I somehow brought it up late, them went delinquent a month or two later....who does that work?  If I would have momentarily caught up, does that set the clock back to zero again?

 

Also what is a GW letter?

 

Thank you again!

 

Message 3 of 6
scanada_82
New Contributor

Re: Question about paying off chargeoffs

I could be wrong, but once your account went to CO status that is what it stays as. Making a payment on a charged off account would only change the date of last activity. The DOFD would not be changed once the account reaches a CO status. Somebody with a little more experience can probably explain it it better, but your DoFD should not change. The only way you could of brought CO current was to pay the full amount owed. Make sense?
683 fico
Message 4 of 6
scanada_82
New Contributor

Re: Question about paying off chargeoffs

The date it first went delinquent is the date your account went late which lead to the CO status. So if you were 30-60 days late, then caught up you were fine. Until the last time you went to 30 days late and never caught up leading to the account being a CO account. That's your DOFD
683 fico
Message 5 of 6
deltagirl99
New Member

Re: Question about paying off chargeoffs

Thank you.  Great information everyone!

Message 6 of 6
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