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Hello- Can someone please advise the best way to handle this?

Gidge
New Member

Hello- Can someone please advise the best way to handle this?

https://imgur.com/a/BXiT2a8 The search feature keeps freezing on me but I am certain this has been asked. I have a charge off on my account from Chase Credit Card. This does not seem to be a collection account. Today Chase sent me a letter offering to make a payment of 560.00 or two payments of 280.36. The letter states once the 560 is paid they will stop further collection activity, reduce remaining unpaid balance to 0 and notify credit agencies the account has been paid for less than the full balance. How do I go about this? Im assuming taking the offer to pay the 560 is ideal but do not want to reage the account or have them not uphold the deal they presented me.

Here are the details

The charge off amount is 3731.85 

Date opened is January 2018

Date Reported is July 2019

Date of last payment is November 2018

Deliquency first reported is July 2019

Date to be removed from account December 2025

Account type is Revolving

Activity designator is closed

Comments are Charged off account
Account closed by credit grantor

Message 1 of 7
6 REPLIES 6
donkort
Valued Contributor

Re: Hello- Can someone please advise the best way to handle this?

All in all, it's probably best if you pay this off.  But I don't believe it would raise your credit score too much.

 

It probably would have been slightly better had you settled for the full amount.

 

Paid charge-offs are penalized almost as much as unpaid charge-offs.  I find this to be peculiar----but that seems to be the way it is.

FICO 8: EQ 810; TU 816; EX 822 as of 7/5/2022
Message 2 of 7
Gidge
New Member

Re: Hello- Can someone please advise the best way to handle this?

Thank you for replying. Im concerned about it hurting my score further which im assuming would happen if a collection company got involved.

Date of last payment is November 2018

Deliquency first reported is July 2019 but Last Payment Made
11/16/2018

Message 3 of 7
donkort
Valued Contributor

Re: Hello- Can someone please advise the best way to handle this?

I wish I could give you a positive answer----but I believe charge-offs count similar to collections.

 

If this is reported as a collection, in addition to being reported as a charge-off, I don't believe it would affect your score too much.

 

 

 

 

FICO 8: EQ 810; TU 816; EX 822 as of 7/5/2022
Message 4 of 7
thornback
Senior Contributor

Re: Hello- Can someone please advise the best way to handle this?


@donkort wrote:

I wish I could give you a positive answer----but I believe charge-offs count similar to collections.

 

If this is reported as a collection, in addition to being reported as a charge-off, I don't believe it would affect your score too much.

 


If a collection reports in addition to this chargeoff, you will be penalized  - there will be a scoring penalty for each derogatory account. Additionally, collection agencies tend to update their collection tradelines monthly - never allowing the negative to age so the scores remain severely suppressed.  They also sometimes add additional fees to the principle balance. 

 

@Gidge  it appears this chargeoff will remain on your reports for at least another 3 years - during which time Chase may continue to update the tradeline regularly which will make the derogatory appear fresh in the scoring algorithm, keeping your scores suppressed.

 

i would recommend taking the settlement to get this squared away.  Once paid/updated to reflect a zero balance, no further updates to the account will occur and your scores can begin to recover (how well they recover depends on what other negative items you have on your reports, if any). And there will be no future surprises to worry about (such as a collection account or sudden drop in score from a random account update).

 

While a paid chargeoff will continue to negatively affect your scores til it reaches the 7 year mark and drops off, you will begin to regain some points as the derogatory ages. 

 

The outstanding balance on the account is currently being factored into your overall utilization which is likely costing you points as well.  Paying it so it reflects $0 will eliminate that usage percentage.  This can sometimes result in a score boost depending on how much your utilization is reduced.   

 

The final update to relect payment on the tradeline may result in a temporary loss of points if Chase hasn't updated the account recently. This is because the "date updated" field will populate a more recent date, "refreshing" the negative.  However, those points are regained within a few months as the derogatory ages.

 

IF the points gained from reducing utilization exceed the number of points lost from the final update, then you may actually see a net gain after the account is updated to reflect payment.   

 

Bottom line, paying it is best for your scores in the long run.  I'm assuming that the statute of limitations (SOL) for debt collection in your state has expired so you can no longer be sued by Chase - but they can certainly ramp up collection activity or even sell the debt to a debt buyer. 

 

That is also an extremely generous settlement offer from Chase. 

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Message 5 of 7
chiefone4u
Established Contributor

Re: Hello- Can someone please advise the best way to handle this?


@Gidge wrote:

https://imgur.com/a/BXiT2a8 The search feature keeps freezing on me but I am certain this has been asked. I have a charge off on my account from Chase Credit Card. This does not seem to be a collection account. Today Chase sent me a letter offering to make a payment of 560.00 or two payments of 280.36. The letter states once the 560 is paid they will stop further collection activity, reduce remaining unpaid balance to 0 and notify credit agencies the account has been paid for less than the full balance. How do I go about this? Im assuming taking the offer to pay the 560 is ideal but do not want to reage the account or have them not uphold the deal they presented me.

Here are the details

The charge off amount is 3731.85 

Date opened is January 2018

Date Reported is July 2019

Date of last payment is November 2018

Deliquency first reported is July 2019

Date to be removed from account December 2025

Account type is Revolving

Activity designator is closed

Comments are Charged off account
Account closed by credit grantor


If you legitimately owe the debt, and can afford to pay it; it is worth paying. 

 

Right now, as a charge-off it is reporting as a over-limit card as well as delinquent. Once updated, the penalty for utilization will be removed, at the same time it will update again making it look new to FICO. The utilization drop will give you a small boost, and the account can begin to age providing some score healing. 

 

You won't likely see a big bump in your score until all negatives have been removed. 

 

Regardless of settling for less than owed, or paying in full... the charge-off is a charge-off, the only place the note left on the account would play any role is manual underwriting (and possibly being able to get another chase credit card).

 

Mailing a check certified mail (US postal service) with return receipt and keeping a copy of the letter is all the proof you'd need should they not hold up their offer... fulfilling the requirements of the letter (probably says payment must be received by "x"), a copy of your canceled check and the slip the post office returns, with a copy of the letter gives you a defense should anyone try and collect more of the debt in the future. 

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Message 6 of 7
FireMedic1
Community Leader
Super Contributor

Re: Hello- Can someone please advise the best way to handle this?

Short and sweet. Pay it before it goes to a real collection agency and then there goes another 50+ points down the drain. 2 hits for 1 account. Act quick!




Homeowner since Sept 2020. Sharing my experiences after BK from learning here. Rebuild to recovery from the @ 540's.
Message 7 of 7
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