Credit Repair 101 - Charge Off Removal

If you have a charge off on your credit report most likely it is from a credit card that you stopped making payment on. Once you stop making payments, the creditor will "charge off" the debt and receive a little tax credit for their loss. This does not however, imply that you no longer owe on the debts. Some creditors will hold onto the debt and attempt to collect on it themselves, some hire collection agencies to collect for them, while even others will sell the debt outright to junk debt buyers.

charge offs are absolutely brutal to your credit reports and scores. Your ability to obtain new credit will be significantly impaired. Once a debt is charged off it will remain on your credit reports for up to seven years from the date of last "mutual" activity which is usually the date of your last payment. If you make any payments afterwards you can re-start the clock.

Once your debt is charged off you have few options:

Option #1

Reach a settlement with the creditor to pay off the charge off and ask for the charge off to be removed from your credit records as part of the settlement offer. Depending on the age of the charge off, you might be able to get settlement for as little as 40% - 50% of the original balance. If the charge off is relatively newer, you will most likely have to pay it in full. If the creditor will not agree to remove the charge off from your credit reports, once it is paid in full you should dispute the charge off with the credit bureaus. More than likely since it is paid it will be removed.

Option #2

If you would rather not pay the charge off then you can still attempt to remove the charge off from your credit reports by disputing it with the credit bureaus. There is a chance that it will be placed on your credit report again down the road. Also, the credit can attempt to get a judgement on your credit report to collect on the debt. If this happens you can ask for debt validation to ensure that they have proof enough to collect on the debt.