At Daic Law, our clients frequently have questions about how debt will impact their credit. In a recent post, we discussed what a charge-off is and how it can impact your credit report. In this post, we answer one of the most common questions our Austin debt defense attorney is asked in regards to charge-offs – “can I remove a charge-off from my credit?”
How to Remove a Charge-Off From Your Credit Report
If you are looking to have a charge-off removed from your credit report, take a look at these tips and considerations from our Austin debt defense attorney.
Was the Charge-Off an Error?
If you believe the charge-off on your credit report was an error, then you can immediately open up a dispute investigation with the credit reporting agency. You will need to notify the creditor that you are disputing the entry and provide documentation to support your dispute. Documents that may be helpful include evidence of payments or identity fraud evidence or documentation.
Determine Who Owns the Debt
If the charge-off was reported to credit bureaus by a debt collector or debt buyer, then you must negotiate with them and not the original creditor. You can ask the debt collector who owns the debt and they legally cannot give you false information.
Get the Facts about the Debt
Before attempting to negotiate or pay the debt, you should get the facts about the debt itself. How old is the debt? What was the original balance? What fees have been added? These are important details if you want to negotiate with a debt collector.
Offer a Settlement Amount
Offering a settlement amount doesn’t immediately remove the charge-off from your credit report. However, it allows you to pay off the debt in an affordable way, and starts the countdown for the debt falling off your credit naturally. The more debt you pay off, the sooner your credit report will start to naturally rebound.
Negotiate a Charge-Off Removal
It is not easy to remove a charge-off from your credit report. However, if you are negotiating a payment plan for a debt that is legitimately yours, you may be able to negotiate having the entry removed from your credit report.
What about Pay-For-Delete Agreements?
A lot of people ask us about pay-for-delete agreements. Yes, sometimes you can technically negotiate that repayment is contingent on the charge-off being removed from your credit report. This is very rare, and is frowned upon by most creditors and will not be accepted.
Repay the Charge-Off Debt
The best way to get a charge-off off of your credit report is to pay the debt – either the full amount or a settlement amount. A paid off charge-off does less damage to your credit report than an unpaid one, and will eventually fall off completely. Repaying the debt also can prevent the creditor from adding additional interest and potentially filing a debt collection lawsuit against you.
Don’t Forget about Taxes
If a creditor charges-off a debt for less than the full amount owed, you will receive a 1099-C at tax time. A 1099-C indicates that the different between the amount owed and the amount they charged-off is considered taxable income. That means you will pay taxes on that amount.
Get Help from an Austin Debt Defense Attorney
If you have a charge-off on your credit report, are being sued by a debt collector, or have questions about bankruptcy, contact an Austin debt defense attorney for help. At Daic Law, we help consumers understand their legal rights and options for debt relief. We have helped hundreds of clients negotiate debt settlements. We fight for your rights when creditors or debt collectors violate the law.
Find out how we can help you by contacting us today! Call us at 877-893-6040, or email us at info@daiclaw.com. Use our online contact form to schedule your initial consultation with one of our attorneys.