topic Re: Charge off's in Rebuilding Your Credit

Charge off's

tayloreat713 — Sun, 04 Nov 2018 14:11:14 GMT

I have a personal unsecured loan thru a credit union that has been charged off. Should I call to settle or pay for deletion, make arrangements to pay monthly or just let ot age?? What should I do??

Re: Charge off's

CreditInspired — Sun, 04 Nov 2018 17:14:27 GMT

OP

I think any of the above with the exception of letting it age off (7yrs) are great ideas.

Re: Charge off's

tayloreat713 — Sun, 04 Nov 2018 18:31:52 GMT

In your experience which will improve my score the most?

Re: Charge off's

Anonymous — Sun, 04 Nov 2018 19:20:49 GMT

Pay for deletion is really the only option that's going to help your score I think.

@tayloreat713 wrote:
In your experience which will improve my score the most?

Re: Charge off's

Anonymous — Sun, 04 Nov 2018 19:22:24 GMT

Depending on who the lender is they may not do a pay for delete.

Settling the account for less then the full amount will look only look worse on your report then paying in full upon manual review.

Just make sure when settling , if you go that route, make sure the lender reports a zero balance.

I’ve gotten rid of some charge offs in the past but some were only willing to make that deal with paying the full amount. YMMV tho.

Re: Charge off's

RobertEG — Sun, 04 Nov 2018 21:22:44 GMT

A charge-off is a determination by the creditor that the delinquncy is serious, and has extended to the point where it is no longer expected that the consumer is going to pay the debt.

A first, and probably most significant, consideration is how delinquent is the debt, meaning when was your date of initial delinquency with the creditor that preceded their taking of the charge-off, with the debt remainind continuously delinquent from that initial delinquency up to when they took the charge-off?

That date is very sigificant, as it controls when the reporting will become excluded from your credit report, and is also the date that most states use in setting the statute of limitations on when the creditor can bring civil action seeking a judgment on the debt.

It will also, if a debt collector additionally reports a collection on the debt, be the date used for exclusion of that collection.

What is the DOFD? The creditor was required under the FCRA (section 623(a)(5)) to have reported the date of first delinquency ("DOFD)") to the credit reporting agency no later than 90 days after they reported the charge-off, so the DOFD will be of record in your file.

If the DOFD is not showing on your commercial credit report, it can usually be obtained by ordering a copy of your credit report from the free, government-sanctioned site at annualcreditreport.com, or directly from the CRA.

Paying, either in full or via a settlement for less, will discharge the debt, and thus prevent either filing of civil action (if still within SOL), or the assignment or sale of the delinquent debt to a debt collector, and thus the addition of a collection to your credit report.

It will also prevent further update by the creditor showing continued delinquency of the debt, thus extending the period of delinquency,and thus the negative scoring impact of the continued delinquency status.

The issue of score impact is not simply obtaining a score improvement, it is also one of considering any further damage that can be done if the debt remains delinquent.

Yes, obtaining deletion of derogs by way of a PFD is desirable, but is not totally within your control. The creditor must agree, and being seriously delinquent does not promote feelings of good-will.

Give a PFD a go,but if they decline, I would not necessarily, for scoring purposes, conclude that waiting for the CO to become excluded at approx 7 years from DOFD is the best step. Paying wont result in immediate score improvement, but may well prevent further damage, and will certainly look better to prospective new creditors upon an manual review of your credit report than would continuing to have an unpaid, delinquent debt.

Re: Charge off's

tayloreat713 — Sun, 04 Nov 2018 21:39:16 GMT

Thanks for replying!! I'll have to review my report again but the DOFD is less than 1 year ago. I'm estimating it was in June 2018. If I PFD or make payments to pay off the debt this will have a better impact on my score verses doing nothing.

My next question for you is. What should I focus on first, paying off collections and CO OR paying down existing open credit cards? I'm hoping to improve my score enough to lower my DTI and get approved for a home.

I really appreciate your throughout reaponse. It helped!!

Re: Charge off's

tayloreat713 — Sun, 04 Nov 2018 21:43:26 GMT

Great input!! In that case if they don't agree to a PFD and report a zero balance I'll make payments until the debt is paid off.

Re: Charge off's

RobertEG — Sun, 04 Nov 2018 22:17:52 GMT

When an unpaid debt remains delinquent, the creditor can continue to report monthly delinquency status, such as CO, and a debt collector can continue to make monthly updated reporting on their collection to show that the debt remains unpaid.

In either event, that extends, for scoring purposes, the period since initial delinquency, and thus further damages your scoring of that delinquent debt.

If the creditor or a debt collector is continuing to make regular updated reporting, then paying that delinquent debt will prevent further increase in period of delinquency, and thus let those derogs begin to age in scoring impact (i.e., some small reduction in negative impact).

Thus, a first consideration in deciding whether to pay a CO of collection is whether they are continuing to make regular updated reporting.

A scond consideration in deciding whether to pay CO or collections is the SOL status of the debt.

If still within your state SOL period, they continue to have basis for bringing civil action,with possible addition of a judement derog to your scoring, and ability to then seek garnishment pay or attachment of assets.

What is the SOL status of each collection or charged-off debt, and are they continuing to make regular updated reporting your the CRAs?

Re: Charge off's

tayloreat713 — Sun, 04 Nov 2018 23:33:11 GMT

The CO's are well within the SOL since it was just reported CO less than 1 year ago. Also, they report the delinquency on my CR's monthly. For score purposes which is better to tackle first, CO or lowering current credit card balances?

Re: Charge off's

tubbynerd — Tue, 06 Nov 2018 02:35:54 GMT

In my experience, well ok it's not extensive experience, just 2 different Credit Unions, I've found them really easy to deal with and understanding. I'd give them a call. Really can't hurt anything. Even live chat is an option to get the conversation statrted if you're terrified to call.

Re: Charge off's

tayloreat713 — Tue, 06 Nov 2018 03:07:22 GMT

I'll call tomorrow. I just want to come to a resolution and get this over with.