Discovering you have a charged off debt
Dealing with charge off's is one way to improve your overall credit rating. The problem is many consumers choose to ignore their past charge off's and hope the issue will go simply go away. In many cases, that is not going to happen.
In fact, these entries can stay on your credit report for as long as seven years. During that time, you may find your credit score lowered, find that loans are given at higher interest rates, or find that you cannot get any credit at all!
Tips on how to effectively deal with a charge off
There is some good news, however, when it comes to dealing with past unpaid bills. Here are some tips on how to handle charge off's effectively.
The first thing to do, if you have not done so recently, is to get copies of all three credit reports. You want to copies from Experian, TransUnion, and Equifax. Once you have your reports, sit down with each one and look for the creditor that reported the charge off. You will probably find that creditor on all three, but perhaps not.
The next step is to make sure that the charge off listed is indeed yours. This is called validation, and it is an important step in the process of cleaning up your credit report. Simply write a letter to both the creditor and, if they have one, their third-party collection agency. You want to ask them for a debt validation in the form of written account statements the original creditor.
This should include:
The total amount that you currently owe;
Complete payment history;
Andy added charges such interest, fees, and penalties;
A copy of the original contract, agreement, or credit application that was initiated between the creditor and yourself;
Don't forget these steps
Also, request any documentation that the collection accounts (debts) you owe is now owned by any collection agency that may also be reporting the item to the credit bureaus;
In addition, ask for any documentation that any third-party collection agency, if there is one, is legally bonded to collect in your state;
And lastly, ask for any documentation that collection fees were added pursuant to the original lending contract or agreement.
Two things can happen at this point. The companies that are reporting the charge offs to the credit bureaus will validate your debt within 30 days, or they will not.
What can happen and what may not happen
If they do validate the debt, you have some options:
You can try to make a deal with the credit collection company. To do this, write a letter asking them if you can make full or partial payment in exchange for them deleting the charge off from your credit report. Remember, they are in the business of collecting money, and will often be happy to do this for you.
If they agree, and this agreement needs to be in writing, send them a money order or cashier's check for the amount agreed upon. Make sure you make copies of the agreement and the check or money order.
A smoother solution and easier alternative
The other option you have is to simply wait. There is a possible danger to repaying a charged off and that danger is known as reactivating the debt. This reactivation can actually cause a drop in your current credit score.
The best way to handle this problem is to remove collections accounts. Look at your current score and decide if you can afford to lose a few points off it. If you can, then go ahead and try to make a deal with the creditor. If not, well, only you can decide what to do in that case.
For many consumers, taking the above actions is something they would rather not do alone. When this is the case, consider working with a company such as Lexington Law. The company has over 20 years of experience in helping consumers repair their credit, and all of their methods are completely legal.