Does it make a difference to pay down a charge-off several years later?

[peak_peasantry]

My income was significantly reduced in late 2022. I had several accounts go into charge off status somewhere mid 2023. Most of them, I was able to come up with a payment plan/settle. However, in all the busyness and stress, I had overlooked two accounts, and over time, forgot about them. I'm bummed that i neglected these two accounts for this long with no payment, at all!  The question is: will contacting them to make payment arrangements even make sense at this point?  It's been 3 years. SOL in my area is 6 years (i think), and on the credit report it says that it may fall off in 2029.

The balances are $7000 and $5500, respectively.   I have room to pay about $100/mo per account, but mathematically, that wouldnt even finish off the entire balance before it falls off of the report.  Does making some kind of constant payment (even if it's, let's  say $50/mo) to an account with a large charged-off balance even look "favorable" to future lenders? or has the damage been done?  I'd rather just wait it out if there really isn't any benefit at this point.

[1lifeisworthit]

It would lower your utilization incrementally. So that might help.

I do not know if it would report good monthly payment behaviour, since the payments would not be "full" payments unless you got a payment agreement for $50.00 per month (for each account). So it may help in that way, or it may not. If it reported good monthly payments for the next 3-4 years, that would definitely help. I'd find out if they'd set up an agreement for only $50.

It may reset the SOL, or it may not.

They still have plenty of time to sue you, and those amounts are definitely sue-worthy. Setting up a payment schedule would head that off, definitely.

You are holding a large bag of "maybe..." 

I'd start stashing that money (your $100) into a NOT TO BE TOUCHED hysa, myself, so that I have some money to work with if either of them decided to reach out with a settlement offer... This would be savings dedicated to only these two debts, nothing else. Like I'd signed a payment plan and that money was already gone away.

[pizzadude]

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@peak_peasantry wrote:

My income was significantly reduced in late 2022. I had several accounts go into charge off status somewhere mid 2023. Most of them, I was able to come up with a payment plan/settle. However, in all the busyness and stress, I had overlooked two accounts, and over time, forgot about them. I'm bummed that i neglected these two accounts for this long with no payment, at all!  The question is: will contacting them to make payment arrangements even make sense at this point?  It's been 3 years. SOL in my area is 6 years (i think), and on the credit report it says that it may fall off in 2029.

The balances are $7000 and $5500, respectively.   I have room to pay about $100/mo per account, but mathematically, that wouldnt even finish off the entire balance before it falls off of the report.  Does making some kind of constant payment (even if it's, let's  say $50/mo) to an account with a large charged-off balance even look "favorable" to future lenders? or has the damage been done?  I'd rather just wait it out if there really isn't any benefit at this point.

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There's little to no upside to paying this from a FICO scoring and future lenders perspective.   The damage is done, and any future payment / payment plan wouldn't do anything expect possible reduce your utilization as noted above - assuming the accounts are still being factored in there.  

How comfortable you are in rolling the dice that they won't sue you ?   Either way, your FICO score will be negatively impacted as long as the CO accounts are still on your reports.  

[GZG]

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@peak_peasantry wrote:

My income was significantly reduced in late 2022. I had several accounts go into charge off status somewhere mid 2023. Most of them, I was able to come up with a payment plan/settle. However, in all the busyness and stress, I had overlooked two accounts, and over time, forgot about them. I'm bummed that i neglected these two accounts for this long with no payment, at all!  The question is: will contacting them to make payment arrangements even make sense at this point?  It's been 3 years. SOL in my area is 6 years (i think), and on the credit report it says that it may fall off in 2029.

The balances are $7000 and $5500, respectively.   I have room to pay about $100/mo per account, but mathematically, that wouldnt even finish off the entire balance before it falls off of the report.  Does making some kind of constant payment (even if it's, let's  say $50/mo) to an account with a large charged-off balance even look "favorable" to future lenders? or has the damage been done?  I'd rather just wait it out if there really isn't any benefit at this point.

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if you're within the SOL and those lenders can see you're making progress on other balances, I have to imagine that makes you more likely to be sued (NAL)

but from a FICO perspective, you won't make much of any progress until all past due debts are paid down to 0 and you stop being past due