Tag: collections

Three Questions About Charge-Offs

~ Carolyn Warren ~ Leave a comment

Are you required to pay a charged-off account? Let’s look at three questions people ask.

#1 If my account was charged off, does that mean the company got a tax write-off; and therefore, I no longer have to pay? No.

That would be like saying, “If I steal a leather jacket from Macy’s, they got a tax write-off, so I can keep the coat for free.” Wouldn’t that be dandy if it were true! We could all become thieves and help companies lower their taxes at the same time.

If your account is a charge-off, you still owe for the product or service you purchased. It is still going to hurt your credit score until you get it taken care of. (How to do that is in Chapter 15.)

#2 If my unpaid bill is sold to a third party collection agency, and I never had an agreement with that agency, am I off the hook for the bill? No.

Selling unpaid bills to a collection agency is a common practice, and it is legal. You still owe for the product or service you purchased. The collection agency must follow the Fair Debt Collection Practices Act in order to legally collect from you. You have every right to hold them to this before sending any money (as explained in Chapter 2.)

#3 If I negotiate for a settlement on my collection or charge-off and pay only a fraction of what I owe, will that harm my credit score? No.

Ha, that is a lie some collectors try to use in order to get more money from you. Negotiating a settlement does not harm your credit score more than paying the full balance. However, some collectors will agree to remove the charge-off from your credit report only if you pay the balance in full. In that case, you need to look at the age of the account, the balance owed versus the settlement offer, and your overall credit profile in order to decide what’s best for you.

I’ve had numerous old collection accounts removed from my credit report and am pleased that my credit score has increased from about 500 to 700 or so today.

Robert R., March 2022

Learn how to handle collections and charge-offs like the pros.
The full step-by-step guide is in Repair Your Credit Like the Pros here.

How Long Does Bad Credit Stay On Your Credit Report?

~ Carolyn Warren ~ Leave a comment

The Fair Credit Reporting Act includes Statutes of Limitations on how long negative credit can remain on your credit report. Here is a quick list for your reference.

Late Payments: 7 years from the late payment date

Collections, Charge-Offs: A late account becomes a collection or charge-off after it is 180 days past due. It must be removed 7 years after the last date of delinquency.

Chapter 7 Bankruptcy: 10 years from the file date.

Chapter 13 Bankruptcy: 7 years after the file date.

Judgments: These are more complex. They have a Statute of Limitations of 7 years; however, they may be revived at any time by the judgment holder, making them last indefinitely until paid.

Unpaid Tax Lien: Forever, no Statute of Limitations.

Now available in paperback and Kindle
Now available in paperback and for Kindle

Paid Tax Lien: 7 years from the date of release.
Word of Advice: File the release with your courthouse so the 7-year clock starts.
Hot Tip: If an IRS tax lien is less than $25,000 and paid, you can use IRS Form 12277 to have it removed within 90 days.

Heartfelt thanks to Chad Kusner, President of Credit Repair Resources LLC, for this information.

Are you curious about how credit repair specialists and certified credit attorneys legally delete bad credit?

Kate W. wrote to tell me that her credit score increased from 613 to 720 after following the system in Repair Your Credit Like the Pros.

“My score has improved 63 points in 15 days.”
~ Posted by user name Amazon Customer

“I have read many credit repair books, but none of them helped me like this one. The book has real advice that has been used and actually works.”
~ Tiffany H., Amazon review