How to Remove a Charge-off Without Paying? Quick Look

How to remove a charge-off without paying? Below will also answer you “does a charged-off account show on your credit report”, and “what are my other options for a charged-off account?”.

To remove a charge-off without paying: determine as much as you can about the debt, negotiate a pay-for-delete arrangement, and work with a credit repair agency.

Keep reading.

Table of Contents

What is a Charge-off?

An account that your initial creditor determines to be uncollectible and writes off from their books is known as a charged-off account. Let’s say you’ve gotten behind on your credit card payments and racked up a sizable balance. When you haven’t made a payment in 180 days and your credit card company determines you are delinquent, they have the option to write off the debt as bad debt.

When a creditor reports a charged-off account to the CRAs, your credit files are updated. Then, usually, the original creditor will sell this account to a third-party debt collector, which will then contact you to pursue the charged-off debt.

How to Remove a Charge-off Without Paying?

There are a few key steps you can take to try to get a charge-off removed from your credit report without paying. If the charge-off is correct, though, your efforts might not have the desired impact. If the charge-off is inaccurate, you will definitely want to dispute it. That being said, consider our three methods for removing a charge off below to see if you can pay the debt in part rather than in full:

Determine as Much as You Can About the Debt

Gather all the details you can about the debt, from when it first occurred to the present. Track your payment history. You may still contest the charge-off if it turns out that you have a valid argument. According to federal law, you have the right to ask the credit bureau reporting the inaccurate information to correct it. After looking into your claim, the credit bureau will either correct the error or remove the charge off so you won’t have to pay.

Negotiate a Pay-for-delete Arrangement

Attempting to reach a pay-for-delete agreement with the original lender is an option if you discover that the charge-off is accurate. In other words, you are requesting a lump sum payment in exchange for the lender removing the adverse information from your credit report. This payment may be a portion of what is owed. Some lenders will haggle with you because they know they’d rather get something than nothing at all. But even though pay-for-delete is a legal arrangement between a borrower and the lender, the lender is not obligated to settle. There’s no assurance that they’ll consent to this. If they do, be ready to pay a sum that is more or less equal to the sum owed. So, if they agree, you should be prepared with a small lump sum of cash that you can give them right away. Here are some hard and fast rules that accompany pay-for-delete:
-Offer to settle an old charge in full but don’t. Start the negotiation at 25% and work your way up from there. Based on your financial situation, know the amount you are willing to negotiate up to.
-It is likely the lender will tell you they can’t legally remove the charge-off. That’s not true; we’ll keep negotiating until we get a good deal.
-Even if you negotiate over the phone, be sure to put everything in writing as a follow-up. Prevent paying the lump sum first by doing this. Keep copies of all communications you have with the lender in case they fail to cancel the charge-off after the lump sum payment is made.
Never give a lender access to your bank account by providing them with bank information. Doing this could result in them taking the funds from your account without your authorization.

Work With a Credit Repair Agency

If you find that you are unsuccessful in going it alone, you can contact professional credit repair agencies to see if they can help you get the charge-off removed without paying. This will save you time and energy, but it will likely come with a cost. Typically, credit repair businesses charge a fee for their services. But remember, you can do everything you pay them to do yourself.

Does a Charged-Off Account Show on Your Credit Report?

An account that has been charged off will appear on your credit report. Your credit card company will update the data on you that is reported on your credit report as soon as you have past-due payments.

Your account with them will go from the “Account in Good Standing” portion of your credit report to the “Negative Accounts” or “Negative Items” section.

The creditor will report it as a charge-off to the major three credit bureaus after approximately six months of missed payments. This derogatory mark on your credit report can affect your credit for up to seven years from your first delinquent payment.

Your credit score is severely harmed by a charge-off because a history of on-time payments is the main determinant of credit scores. Your credit may be even more negatively impacted if your debt is collected by a third party.

A low credit score makes it difficult to be approved for the best credit cards, mortgages, auto loans, and other types of loans. If you apply for one of these loans, the loan provider will check your credit report and find the negative mark.

What Are My Other Options for a Charged-off Account?

In some circumstances, you will have to pay in order to remove the charged-off account from your credit report. Negotiating with the collection agency can occasionally help you settle the charged-off account without making a full payment.

Here’s how to approach this procedure.

Negotiate the Settlement Amount

Establishing a settlement amount is the first step in the negotiation process. Keep in mind that there’s a good chance the debt was acquired by the collection agency for a tiny fraction of what it was actually worth, so they might agree to settle for much less than you are actually owed. Even though this is a captive collection agency—one that deals directly with the original creditor rather than buying the debt—they are still paid to collect as much as they can.

Start by offering the collection agency a small portion of the face value that you feel comfortable offering as a lump sum — maybe that’s 30% of the value. The agency will probably counter with a higher offer, which you can accept or reject. Continue bargaining until you arrive at a lump-sum settlement that you are content with.

However, there are times when the collection agency may only be able to offer fixed settlements because it is constrained by a set of rules. Look over these offers, then select the one that best suits you.

Financial limitations occasionally prevent a lump-sum settlement from being possible. You can still come to a settlement agreement in this situation, after which you can ask for payment plans for the outstanding balance. Some collection agencies, however, might only do so if you agree to pay in full. Others might allow you to make payments on a partial settlement.

Negotiate a Pay-for-delete Arrangement

When you settle a collection account, the paid charge-off account will continue to appear on your credit report for up to seven years even though it has no outstanding balance. The effect that collection account has on your FICO credit score will, nevertheless, lessen over time.

In addition, when requesting a loan for a home, a business, or an automobile from a future lender, a $0 collection account will be simpler to explain to an underwriter than an unpaid charge-off.

Some debt collection agencies will accept a “pay-for-delete” agreement, which means that as soon as you pay off the account within the predetermined time frame, the collection agency will stop reporting the negative account to the credit bureaus. Although it’s uncommon to do so, especially if you accept a payment plan, it’s important to inquire because it can quickly improve your credit score.

Keep in mind, even if the collection agency deletes the collection account, you’ll still have the negative payment history from the original lender to deal with on your credit report.

Follow through on your promise by periodically requesting a free credit report and checking for the collection account if the collection agency agrees to the deletion. You can pull your credit history at no cost from sites like Credit Karma or Credit Sesame. You can also get a complimentary credit report once per year from all three credit bureaus at AnnualCreditReport.com.

FAQs

How Do Charge-offs Affect Your Credit?

Charge-off accounts can significantly lower your credit score. Things like time passing or even paying part or all of the account balance can lessen the impact of the charge-off.

How Long Does a Charge-off Stay on Your Credit Report?

Charge-off accounts can stay on your credit report for up to seven years. The clock on the seven-year period when the account is first reported as delinquent, typically with the original creditor.

Can You Remove a Charge-off Without Paying?

There is a very slim chance that the charge-off account will be removed from your credit report if it is true and accurate. Whether you pay the debt or not, it must be removed from your credit report if the data is incorrect or the CRAs are unable to verify the obligation.

What Can You Do If You Can’t Remove the Charge-off?

Attempt to lessen the impact of the charge-off on your credit score if you are unable to have it removed from your report. This can be done by paying all or some of the debt or even letting time pass. Rather than concentrating only on the charge-off account, concentrate on repairing your credit in other accounts (possibly by attempting to build new credit). Your credit score will eventually increase.