Speak Candidly With Your Creditor
Begin with the simplest task of just speaking to your creditor. Explain your financial situation and the reasons behind the second mortgage charge off. It's possible that the creditor was unaware of your situation, such as losing a job or death in the family. In fact, a creditor could take off the charge off from your credit report in as little as a few days. However, this action doesn't forgive the amount owed on the property.
The Creditor's Perspective
When the creditor only receives silence from a borrower, they can only guess about the financial circumstances. Their standard protocol is to place a lien against the property and report it to the credit agencies. Ideally, the creditor requires the entire balance back to clear up the credit score. They may receive that amount if you sell the property and pay off the first mortgage, for example. In the meantime, that charge off will remain on your credit report for 7 years.
Settling the Debt
Although the situation appears dire, you do have some options with your creditor to clear that charge off from your record. Contact the lender and offer them a settlement. If you owe $50,000 on the second mortgage, for instance, offer to pay them $20,000 over the next few years. Lenders usually look upon a settlement as recouping some of their investment instead of losing all of the funds. Simply negotiate a settlement that you can afford and communicate clearly with the creditor. As a result, you'll start the removal of the charge off from your report.
Creditor Must Remove Charge
Regardless of the charge off reasons, no one can remove that item from your credit report except for the creditor itself. The business places the negative credit item on your credit history so they have the power to remove it. You're welcome to speak to different managers within the credit company to see if there are options for your particular case. It's possible that you'll have to live with the poor credit for a few years, however.
Ask for Written Confirmation
If you're able to negotiate a settlement or remove the charge off otherwise, always ask for a written confirmation. Although most credit agencies are reputable entities, verbal commitments don't stand up in a court of law. A written agreement about removing a charge off from your credit report is a guarantee that it will occur within the parameters of the agreement. Read through this agreement, so that you understand your responsibilities.
Working With All Three Credit Bureaus
There are three credit bureaus that contribute to your overall score and history report. With that written creditor agreement, contact each bureau and offer them proof of the credit item change. They'll probably require a copy of the agreement before removing the item officially. Although it takes time to contact each bureau, you'll notice your score increasing dramatically.
Keep Checking Those Yearly Credit Reports
You may have successfully removed a charge off from your report, but you still need to pay careful attention to your history. Ask for a credit history each year from each of the bureaus. Read through the information and verify that it's correct. That charge off should never appear on the history again, but the creditor may still be in contact with you to continue payment plans.
Communication is the key to any successful creditor negotiations. When you speak professionally and with a courteous manner, most lenders will do their best to help you out. It's very rare if you must consult with a legal professional on a second mortgage charge off. Simply follow these steps to find your way back to a stellar credit score.