Archive for the ‘charge offs’ Category

Top Five Charge Off Laws for People in Debt

Friday, January 28th, 2011

Did you know that there are more than 20 laws that protect somebody with a charge off? Here are the top 5 charge off laws:

Charge Off Law #1: Right to Counsel
Disputing a charge off with the creditor and credit bureaus can get ugly. Historically, credit bureaus have been fined multiple times for ignoring charge off disputes.

A charge off on your credit history is big deal. It can keep you from owning a home, getting loans for transportation, or getting credit for much needed medical care.

That’s why you have the right to hire a credit lawyer who can dispute charge offs on your behalf. (Don’t listen to a credit bureau worker or banker when they say you can’t get credit repair help.)

Charge Off Law #2: the FCRA
The Fair Credit Reporting Act was enacted in 1970. It is the federal law that regulates consumer information. Along with the Fair Debt Collection Practices Act it exists to protect you, the consumer.

Under the Fair Credit Reporting Act creditors have only a MAX of seven years to report your delinquency to the credit bureaus. – That’s seven years from the time of the original first delinquency.

Seven years is a very long time. You don’t have to wait the entire seven years however. Seven years is the MAX. You can take action at ANYtime to dispute and erase a charge off. Consider sending a charge off dispute letter to the bureaus reporting the charge offs.

Charge Off Law #3: State Law
Each state has its own laws regarding statute of limitations and debt. This means each state regulates how much time is allowed for a creditor to sue you for a debt.

You might be surprised to learn that collection agencies sue people every day for charge offs (which then result in judgments) way past the statute of limitations. It is no one’s responsibility but your own to raise the question of statute of limitations.

Charge Off Law #4: Debt Validation
It is your right to ask a creditor for a validation of debt including charged off debt. If the charged off account is now in the hands of a collection agency, then by law they must provide you with the name of the original creditor and the amount owed.

They might not do this and you’re stuck with the charge off. Debt validation is more advanced for the do-it-yourselfer. I had Lexington Law file debt validation – which worked because the collection agency immediately erased the charge offs. Here’s the debt validation hotline number: 1-866-246-7311.

Charge Off Law #5: Demand Proof
Even if the creditor/collection agency has provided a validation of the charged off debt, it is your right to request additional proof.

By law they must provide you with a copy of any and all contracts you signed concerning the debt. You can also request them to provide you with a copy of the last bill right before the account was charged off.

A charge off on your credit report is very damaging to your credit score and your ability to obtain credit. Interpreting the laws and knowing which apply to you can be confusing. To chat with a charge off expert, call this number: 1-866-246-7311. There’s no charge and you’ll get answers you’re looking for about charge off laws.

Tags:
Posted in charge offs | 62 Comments »

What is the Effect of a Charge Off on Your Credit Score?

Wednesday, January 19th, 2011

If you have a charge off on your credit report, perhaps you’re wondering just how much it will effect your credit score? Can you still get new credit even if you have a charge off? Maybe just one or two charge offs won’t hurt your score that much?

Sadly, there is no concrete answer to how much a charge off effects your credit score. Exactly how one negative item will affect your credit score is somewhat of a mystery and has been the subject of much criticism of the three main credit bureaus. The bureaus use top-secret algorithms to calculate your credit score.

In other words, the bureaus don’t want you to know how a charge off on your credit report affects your credit score. We DO know that it will differ from one person to the next.

To determine how much that charge off is damaging your credit score, consider these factors:

Your Payment History
Payment history refers to how you have been paying your bills and installment loans. How often have you missed payments? How long have you let payments fall past due? 30 days? 60 days? More than 180 days?

This pertains not just to the charge offs – which usually indicate a late payment of 180+ days, but your other accounts.

Has anyone sued you for payment? Have you also defaulted on a student loan or a car loan? If you have any of these negative entries on your credit report then your score is already in the dumps and a single charge off will only lower it 10-15 points.

On the other hand, is your credit report in good shape other than the charge off? If so, then expect that charge off to lower your score at least 50 points.

Other Amounts Owed
This not only refers to the obvious: how much money do you owe your creditors but also how much do you owe in relation to the credit limits on your accounts.

Are your credit cards maxed out – BAD!
Do you have a lot of “cushion?” – GOOD!

How many accounts do you have that show unpaid balances? Even if you’re paying your bills on time, if you have a large number of bills they could be affecting your credit score negatively and lenders see you as a risk.

Length of credit history
This is a BIG factor! How long have been responsible (or irresponsible as the case may be) with credit? If you’re 18 years old or somebody who refuses to use credit cards, then don’t expect to have a good credit score.

Does your credit report show you as being a trust worthy borrower? How about new credit? Have you been applying for lots of credit recently?

Having a number of hard inquiries flags lenders that you might be looking to make a number of large purchases or maybe you are short on cash and need to open credit to make ends meet in the short term.

(By the way, here is how to remove inquiries from your credit report).

Here’s the bottom line: No one can tell you exactly how much one charge off will lower your credit score but the people at Lexington Law Office know more than anyone. Since you already have one charge off, it’s probably a good idea to get a consultation on your entire credit report. They are available to advocate from 5 am west coast to 9 pm west coast time.

We used them – and it worked! You can see us in our new home – purchased with a 6.25% mortgage here.

Check out this video on how to remove charge offs:

Tags:
Posted in charge offs | No Comments »

Buying a Home with Charge Offs on Your Credit

Tuesday, January 4th, 2011

First, the good news: Nobody knows what it’s like to try and buy a home with charge offs on your credit history like we do. My wife and I had dozens of charge offs and collections on our credit reports when we applied for our new home mortgage.

Second, the bad news: mortgage lenders will probably NOT approve your home mortgage if you have charge offs on your credit. However, don’t give up. You can legally and ethically delete almost any questionable charge off and get into that new home!

If your experience is like ours was, your home buying process went something like this:

  • You and your partner go to open houses and get excited to buy a house
  • You find a house you REALLY want, but don’t have financing yet
  • You go to bank and they run your credit report
  • The banker dude or lady comes back and tells you how bad your credit is
  • You think…”Oh SH&T, how am I going to get that house?!”

If you’re thinking – “YEAH, THAT happened to me.” Here is some advice from experience:
Get a pro to handle the mess of removing the charge offs and other nasty items. We tried sending out credit repair letters, but only dug a deeper hole.

You need to know HOW to dispute bad credit. (You can’t over-dispute or else your file gets a RED FLAG attached to it, which makes credit repair way more challenging.)

We used Lexington Law who got rid of our charge offs just in time to close on a new home in the suburbs of Rochester. (See the full story of how we bought our house with bad credit here)

If you’re the forward thinking type and have planned ahead and you know SOMETIME IN THE FUTURE you’ll need to get your credit in shape to buy a house, then the next paragraph is for you:

Don’t ignore those charge offs – Act Now!
Ok, you’ve got a couple options to remove those charge offs. Again, we used Lexington Law who does more than just file dispute letters. Removing these chargeoffs can be like a science.

They used debt validation and a few other more ‘underground’ methods when a dispute letter just doesn’t cut it. If you’re curious about how it’s done, you can give our paralegal – Beth – a call. Here’s her direct line: 1-866-246-7311.

Finally, some good news again: You’re planning ahead. Since charge offs are one of the biggest reasons consumers are denied home loans, it is good idea that you’re taking steps TODAY to get into that new home!

Tags: ,
Posted in bad credit mortgage, charge offs | No Comments »

Why You Should NOT Pay a Charged Off Account

Saturday, January 1st, 2011

When I realized I had to fix my bad credit, I thought to myself:

“All I have to do is pay all my charge offs and then my credit score will go up.” WRONG!

You definitely should NOT pay a charged off account. I know you’re thinking that I am some kind of deadbeat or un-ethical person, but paying a charge off will make your credit score go down.

Listen, I don’t make the credit score rules, but I certainly will take advantage of them. Especially when paying off a charge off may hurt you!

A charge off is a complex item when it comes to rebuilding your credit score so let’s go over a few of the basics. By the time you finish reading this article, I guarantee you’ll agree that paying a charge off is a big mistake!

Definition of a charge off
When you don’t pay a debt – usually a credit card bill or installment loan, the creditor (credit card company) will decided to “charge off” the debt.

Usually this happens after you don’t pay any money on the debt for 120 consecutive days. When the charge off your debt, the credit card company gets to count the transaction as a loss – on the books. (they lose money because you didn’t pay, but they pay less taxes to the tax man.

Why Paying a Charge Off is a Mistake
Here’s what happens when you just pay a charged off account without researching your options:

(a) the creditor UPDATES your credit report. Instead of having an older unpaid charge off on your credit report, you now have a brand NEW PAID charge off!

To a lender it looks like a brand new delinquency. A sane person assumes you are rewarded for you owning up and paying your debt. However, it works the opposite. A brand new delinquency will destroy your credit score.

(b) once you pay that debt, your leverage to negotiate with the creditor is gone. Often a charge off is sent to a collection agency who tacks on illegal interest and fees. If you pay the entire debt without first negotiating, you’ll never get that money back.

Negotiations are about having leverage. If the collection agency has yet to collect any money, you have some leverage. This allows you to settle the debt for less while also forcing them to erase the bad credit from your credit report upon payment. (this is called “pay-for-delete” and our attorney at Lexington Law 1-866-246-7311 – taught us how to do it.)

If you pay the charge off, your leverage is ZERO.

Here’s the bottom line: If you have a charged off account, don’t pay it – at least without exploring your options. I realize the whole issue is confusing and the laws intimidating, and counter-intuitive. If you need to talk this over before paying a charge off or collection, give these guys at call: 1-866-246-7311. They helped me figure it all out.

Posted in charge offs | No Comments »

Can a Collection Agency Ruin Credit?

Friday, June 11th, 2010

Can a Collection Agency Ruin Your Credit?

According to attorneys who are experienced in consumer protection, if a collection agency submits an erroneous item on your credit report, you have the right to challenge that item.   If this collection on your credit report goes unchecked, it will ruin your credit rating.

In order to keep yourself from going crazy from this collection item, keep a detailed list of any calls you make or letters you send to the bill collectors.  Make sure to ask for a return receipt when mailing correspondence, so you have a hard copy for your files.  If you make a payment arrangement with a collection agency, never do a check by phone or personal check.  Use a money order so they do not have access to your checking account and try to seize funds.

Sneaky bill collectors will ask for further personal information as a way of trying to sound helpful, but don’t give out any information.  They will use this against you to dig up dirt for a potential lawsuit.

All collections are negotiable and a payment plan can be worked out.  This might be a better option so that the black mark on your credit can be erased.

Remember, if you make ANY deal with a collection agency, make sure you negotiate for full deletion from your credit reports. (Our Lexington Law attorneys used a debt validation technique to get most collection items off our credit report.)

Here is a thorough detailed discussion on how to deal with a collection agency.

Tags:
Posted in charge offs | No Comments »

What Is The Definition of a Charge-Off?

Monday, May 24th, 2010

If you found charge offs on your credit report, you may be asking yourself: What is the Definition of a Charge Off?

Rather than give you a raw definition of a charge off, consider this background: Every bank or other lending institution runs accounting reports at the end of every month to determine their profits and losses.   They track what sells and what doesn’t, what they make money on, and what choices have caused then to lose money.

When you are over 180 days (six months) over due in payment of a debt, such as a credit card, a car payment or a mortgage, you are determined to be in default of that loan, and are most likely not going to pay it.  The company will then declare your debt as a “charge off,” which alerts the credit reporting agencies that you have defaulted.   They are writing the debt off as “uncollectable” and will list you as such when it is time for the company file their federal income tax.

Even though it may be of no fault of your own, such as a job loss, illness, etc., you are still responsible for a debt you’ve incurred.  The company declaring a “charge-off” status does not release you from the debt, however.

You are still responsible for a charged off debt.

It may be in your best interest to try to work out a repayment plan, even if the debt has now gone to a collection agency for follow up.

A “charge-off” will reflect poorly on your credit report, showing as a negative report and lowering your credit score.  Next to a bankruptcy or judgment, it is the worst items you can have on your credit report.

It will remain on there for seven years and the only way to remove it from your credit report is to negotiate a payment plan with the creditor, wait it out, file credit bureau and/or creditor disputes.

When we sought approval from the bank for a home loan, I had about 6 charge offs on my credit report – from credit cards, utility bills, cell phone, and various other debts.

Once we hired lexington credit repair, the first items they deleted were the charge offs. You can read our entire story at www.creditforcouples.com.

Tags:
Posted in Uncategorized, charge offs | No Comments »

What is a Charge Off?

Wednesday, December 2nd, 2009

Definition of a Charge Off – a charge off is usually associated with a consumer credit account and is something that happens when the debtor becomes severely delinquent on an account.

Here is the path of a charge off:

  • debtor stops paying
  • credit tries to collect with “in house” collection efforts
  • time passes and creditor gives up believing collection is impossible
  • creditor charges off debt and sends it to a collection agency
  • the creditor gets a tax break for any amount that was charged off

If you are a consumer and have charge offs, your credit history is probably severely damaged. (This is what happened with two of my credit cards. I was twice rejected for auto loans because of my two charge offs).

You can try removing charge offs yourself by way of a credit dispute letter. Or, you can wait seven years for the information to automatically fall off.

Which do you prefer. I found a website where you can remove charge offs yourself if you prefer to get started without hiring an attorney.

Posted in charge offs | No Comments »