Question by mcook1610: In repairing credit: Should I pay off charge off items or will this even help my score.?
Should i called these companies myself and work out a deal to try to pay half of my balance, or should i hire a service.
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Best answer:
Answer by Slimick
Don’t make the mistake of simply cutting a check to whatever collection agency has the debt for the charge-off and assume that your credit rating will be magically restored…Doing so will not remove it from your credit reports. It will simply be updated to a “Paid Charge-Off,” which, while slightly better, is still a seriously derogatory item. Per the Fair Credit Reporting Act, a charge-off, whether paid or not, can remain on a consumer’s credit reports for up to seven years.
You could be stirring up a hornet’s nest by renewing contact with debt collectors over old, charged-off debt. You could trigger very aggressive collection activity against yourself….Making a payment on charged-off debt can reset the statute of limitations in most states…this would enable the collectors to take legal action against you for the debt. I personally do not think that a slight increase in your credit rating is worth the risk of a lawsuit/judgement.
If you’re going to pay off old-charged-off debt anyway, then you might as well negotiate the lowest settlement you can possibly get, being that the negative charge-off notation is going to stay for 7 years on your credit report anyway. You don’t have to hire anyone to do this for you. You have to be VERY careful in this effort…Mail them a vaguely worded statement like:
I am willing to settle this matter for 25% of the original amount. This is in no way an admission of this debt, but rather an attempt to settle this matter. Your firm must send me a written agreement on your company’s letterhead that you will accept this amount as “payment in full” and that is issue will be settled. Upon receipt of this agreement, I will mail you a money order for this amount.
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