Credit Report Charge Off and Credit Repair
Your credit report may be plagued by a credit report charge off. A credit report charge off occurs when you're so delinquent in paying your credit card company that they eventually close your account and consider your debt as uncollectable. It's called a charge off because they write your debt off as a loss on their accounting records. This usually occurs after an account is at least 180 days delinquent.
But just because your credit card company decides to charge off your credit card account for accounting purposes, it doesn't release you from owing the debt. You're still legally responsible. They may have just decided not to actively pursue collection of the credit card account.
However, credit card companies are increasingly hiring 3rd party debt collection agencies to collect charge off accounts on their behalf. As a result, even though the credit card company reports your account to the credit bureaus as a credit report charge off, they may also assign the account to a collection agency to start debt collection practices to pursue payment.
If this occurs, you should be aware that sometimes, in violation of the Fair and Accurate Transaction Act of 2003 (FACTA), some unscrupulous debt collection agencies will report the charge off account as a collection account also. This can result in a duplicate negative reporting of the same credit report charge off by the credit bureaus. The FACT act prohibits this practice.
Also, some credit card companies may elect to assign your credit report charge off account to a debt collection law firm to pursue legal action against you for non payment of the credit card charge off account. Their goal is to obtain a default judgment and pursue wage garnishment or file a lien to pursue payment of the debt.
Finally, the credit card company may elect to simply sell your credit report charge off account to a debt collection company for pennies on the dollar. If this occurs, the collection company will usually report the account as a collection account to the credit bureaus. Again, the credit card company is obligated by FACTA to discontinue reporting the duplicate account.
Disputing a credit card charge off account
If your credit report inaccurately reports the same credit card charge off account by both the credit card company and the debt collection company, you can send the credit bureau a letter to dispute the duplicate reporting. Also, as of July 1, 2010, new rules apply. So you can write dispute letters directly to both the credit card company and the debt collection company. You don't necessarily have to go thru the credit bureaus.
The best way to remove a credit report charge off from your credit report is to contact your credit card company and negotiate a credit card debt settlement agreement. As part of your debt settlement agreement, get the credit card company to agree to report the credit card charge off account as paid in full or paid as agreed.
In some instances we have been successful in getting the bank to agree not to disclose the terms of the debt settlement agreement to any 3rd parties. This includes their written commitment not to respond to any credit bureau disputes once they receive our client's credit card debt settlement payment.
So basically, after payment per the debt settlement agreement, we then file a credit bureau dispute because the credit report inaccurately reflects the account as a charge off or collection account. Because the bank agreed in writing not to respond to the credit bureau dispute, the credit bureau never receives a reply to the dispute. After 30 days the credit bureau must delete the account per the Fair Credit Reporting Act.
Use the Law
Remember, the Fair Credit Reporting Act does not require a creditor to report your delinquent account. It only requires the furnisher of data to accurately report your credit information, if they choose to report your data. So the bank is free to enter into a debt settlement agreement not to disclose the debt settlement terms, even to the credit bureaus.
Although I must say, I have had to explain the Fair Credit Reporting Act to the bank's legal representatives and in some cases to their executive team, when negotiating credit card debt settlement agreements. But in each case, after pointing this out to them, they read the Act and agreed.
Most people just assume there is a legal obligation to report your personal information to the credit bureaus. But the credit bureaus are not government entities, they are only private companies selling your personal data for profit!
Remember, the key to legal credit improvement is to exercise your rights to require the credit bureaus, collection, companies, and creditors to comply with the credit laws regarding your credit information.
Get credit information and decide for yourself who to trust to help legally improve your credit.
"Why It's Not in the Credit Bureau's Best Interest to Help You Fix Your Credit"