How to Eliminate Charge Off Credit Card Debt

Removing charge-offs can be a struggle.

Charge-offs are accounts that a creditor has deemed "uncollectible." These are serious delinquencies on a credit report. If you have any charge-offs on your report, you should take immediate action to remove them. However, this process can be challenging. The credit bureaus reserve the right to report delinquent debt for a period of up to seven years, but they are not legally obligated to do so. Therefore, if you make a compelling case to them, the credit bureaus may remove negative items from your report.

Things You'll Need

• Copy of credit report
• Copy of charged-off account
• Goodwill letter
• Income documents (pay stubs, W-2s)

Instructions

1. Pull a copy of your credit report to verify that the charge-off actually exists. Visit annualcreditreport.com to obtain a free copy. Once you obtain your report, look in the Public Records section for any charge-offs. These accounts will be shown as at least 120 days overdue.

2. Contact the original creditor to obtain a payoff statement. A payoff statement is a bill that reflects the total amount due on the account including all back interest, fees and late charges. It will have a good-through date (expiration date). Pay off the remaining account balance, if you can.

3. Arrange a repayment agreement if you cannot afford to repay the debt in one lump sum. You will likely need to agree to a monthly repayment plan. Your monthly payments will be based on your monthly income. Make photocopies of your income documents (pay stubs, W-2s) and either Fax or mail them to your creditor. Begin making payments on your debt. Your charge-off balance must be paid in full before you request its removal from your report.

4. Review the time period in your life when the account went delinquent. The credit bureaus will want a reason for the delinquency. This could be due to unemployment, disability, medical bills or a death in the family (the breadwinner).

5. Find any documents that will corroborate your reason for delinquency; for example, award letters for disability payments, medical bills, or proof of SSI (Supplemental Security Income) payments to the debtor.

6. Draft a goodwill letter. The credit bureaus will not automatically remove charge-offs once they're paid. In most cases, if you do not take action, they will remain on your credit for seven years. See Resource 2 for a sample goodwill letter. This letter must describe, in detail, the economic hardship leading up to your delinquency.

7. Make copies of all documents relating to your hardship. Include these in the envelope with your goodwill letter. Send this letter to all credit bureaus reporting the charge-off. See Resource 3 for contact information.

8. Wait for a response. The credit bureaus have 30 days to respond to your letter and 90 additional days to make a decision on your request.

Tips & Warnings

• Do not settle the delinquent charge-off (agree to pay less than owed). Settled accounts are far worse than charge-offs and are rarely, if ever, removed from your credit report.

References

• Bankrate: Removing Charge-Offs From a Credit Report
• Bankrate: Getting a Charge-Off Off Your Credit Report

Resources

• Annual Credit Report
• Sample Goodwill Letter
• Credit Bureau Contact Information