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Charge-Offs ..... GRRRRRRRRRRRRRRRRR!


Spiderella
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Hi everyone,

I have two charge offs, both under $500, and I have been making small monthly payments to the OCs for over a year now. Since both balances are now within payoff range, I recently sent a 'pay to delete' letter to both creditors. Unfortunately, the creditors are saying that they cannot delete the TL since the account went into charge-off status. They both claim they are federally regulated and required to report the charge-off for seven years whether I pay it or not. I argued that they are not required to report, that their only requirement was to report true information if they do report, but they stood firm.

If what they told me is true, then what are my options? Why should I throw money at these charge-offs when I have other bills to pay? Is there any advantage to paying these? Does it matter what the report status shows .... paid, settled, or simply charged off?

Thanks!

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There are a couple of ways to look at it. FICO doesn't care whether it's a chargeoff or a paid chargeoff, it's all the same to it and your FICO score won't be any better for having paid it off. On the other hand, if a lender is making a decision after manually reviewing your credit reports, the fact that the debt was paid off, even though originally a chargeoff, may bode well in their credit decision. Also, down the road a goodwill letter has a better chance of working if the account was paid off.

You're right, an OC is under no federal mandate or any other law to report to the CRAs. If they do report, the FCRA says they must report accurate information...but we all know OCs that have changed tradelines from a negative to a positive status or deleted a negative tradeline entirely.

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Yes, get them to send it to you in writing. Then you can go after them for their lies. One way to do it is to contact their Credit Manager and demand they cite the law they are claiming tells them their actions are true and correct. Remember, you will have the law in front of you so you can put them on the spot. You could also do it by CMRR mail. And, yes, as was said, many OC's will delete or change to positive, but, there is the occasional who thinks they know everything. This is where you gain the edge in reaching your goals. What you could do is attack the TL as to the amounts, dates, how many 30 days, or anything else that may be incorrect. Do it during CHOD and include that if this is not verified, you want it deleted. True, if it is deleted, there is the chance it could return the following month when the OC gets past the Holidays and reports again, especially if they report by tape. Then, if this does happen, hope you don't get the 5 day notice from the CRA. This is a chance you take.

All that has been said is correct in how a lender will look at the TL. They all want a Zero Balance or a deletion when they consider a loan. The biggest thing is that the negative will harm the score, and, is the main reason for your wanting it deleted. This is why you were given some options as what you decide to do is entirely up to you.

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Thanks for everyone's valuable input.

I do want to pay these debts; I'm not one to run away from my financial obligations, and I do believe that it will benefit me in the future if I can show the debts have been paid.

Obviously, I want this to work in my favor. and getting the TLs removed is the ultimate goal, so can someone please direct me to the FCRA clause that states the OC is NOT required to report? I argued this point for five minutes with one creditor, but I'm afraid I wasn't prepared with the FCRA in front of me, and I don't want that to happen again.

Again, thanks for your time and for sharing your wisdom.

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There is no law which states that OC's are not required to report information on a consumers credit file, just as there is no law compelling them to report, or participate in any other VOLUNTARY activity. You can't site a law, cuz it doesn't exist. Reporting credit information is not compliance with ANY LAW. It is totally voluntary on their part and can be performed (or not, as the case may be) at their discretion.

The FCRA outlines policies and procedures for what IS reported.

I agree with antisomething and Retmar, get that bozo to quote YOU the law which compels them to report! Tell them we all want to know!

*feels an 'inquiring mind' haze clouding her* vision* :roll:

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