When an account is first reported by the OC as a charge-off, the original amount of the debt charged-off by the OC is stored under separate field code 23 of your credit file. That remains as a separate credit file reporting, and may not reflect the current debt owed.
When the debt continues to remain unpaid, most states permit the continued accrual of interest and fees on the unpaid debt. That accrual of additional amount due can be added to the initial CO amount, and is then posted under field code 21 of your credit file as the current amount due. Totally legitimate, state law permitting.
When you finally pay a debt, either in full or by settlemement, and get agreement that it is legally paid in full, the CRAs have only one account status code for the account, under field code 13, and that is that the account is now paid and closed with $0 blance due. Account status code 17A, field code 13. Then both the OC and any CA must update their reportting to paid, closed.
Hwever, they retain under payment amounts coding, whethter the balance paid was the full amount, or settled for less than the full amount.
When creditors get a CR, or FICO scores you, it is a more comprehensive look at your credit file, and not just what you see in the plain vanilla consumer credit report you have access to. It shows PIF vs settlement, by way of various field codes other than jsut current account status of "paid."
You may get advice on how much of the original charge-off amount is appropriate to offer, but that whole logic, in my mind, kinda breaks down as the debt gets older.
If a debt was charged off, for example, 3-4 years ago, and they are entitled to interest and fees on the unpaid debt, I dont see much relevancy to the amount of the debt 3-4 years ago, at the time of the charge-off. A CO does not freeze accountabilty for accrual of further interest on their initial provison of funds.
