The Debt Adviser By Steve Bucci • Bankrate.com

Removing charge-offs from a credit report

Dear Debt Adviser:
I had an accident a few years ago, which caused me to not have enough funds to pay two credit card bills. Unfortunately, the debt is now reported as a charge-off. I am in a better situation now and would like to pay my debt in exchange for them removing the negative marks from my credit report. Can you please advise how I should do this to assure they remove the marks from my account? I will not be satisfied if it just says paid account but still remains as a negative mark. If they do not remove the negative marks, I will have no incentive to pay them at this time.
Thank you,
Cheryl

Dear Cheryl:
Changing the past is a much more difficult undertaking than changing the future. You say you failed to live up to two contracts you had with credit card companies. You had a good reason, which makes it understandable, but it doesn't mean it didn't happen. Lenders need to rely on the accuracy of credit reports in order to properly do their job of extending credit at a fair price and with appropriate risks. Having charge-offs doesn't make you a bad person, but it did happen and you will probably and justifiably have to learn to live with that fact.

Still, there is nothing wrong with trying to plead your case and negotiate a deal. The real incentive to pay what you owe is that your word is your most valuable possession, not that you will be removing the negative mark from your credit report. You did not reveal how many years ago this took place. Keep in mind that if your accounts are five or six years old, the negative marks will drop off your report after seven years anyway. If this is the case a little more time may solve part of your problem. Still, that solution may be a bad one, because even if the debt is no longer reported, it is still owed collection attempts may be made. Even the expiration of the statute of limitations in your state may not end collection efforts.

The creditor's main interest is getting paid. It is likely that both of your creditors turned your accounts over to a collection agency to attempt to collect the money due before the accounts were charged off. Therefore, your credit report will reflect a listing for the accounts from the original creditors and collection agency listings.

Begin your negotiations to have the charge-offs removed from your credit report with the collection agencies and follow the tips below:

• All negotiations should be in writing. You will likely need to begin on the phone to ascertain the correct person with whom you should be negotiating. However, once you know who that person is, send everything in writing and request they do likewise.
• Request that the creditor list your account as "Paid as Agreed" or "Account closed -- Paid as Agreed." Any other listing will be a negative mark on your credit report.
• Creditors list negative information on your credit report as a business practice. It is not personal. Keep this in mind when negotiating and use reasoning that makes business sense to the creditor, not moral arguments.
• Negotiate with the collection agency to remove their listing entirely from your report. A collection account is a negative, whether it is "paid as agreed" or not. Make sure you get this agreement in writing as well.
• Request that the collection agencies have your original creditors change your account listings to "paid as agreed." Do not pay anything to the collection agency until you have an agreement in writing from your original creditor. Once you pay, your power to negotiate ends.
• Large creditors may be less willing to delete a negative listing from your credit report. If you must settle for less than "paid as agreed," try to negotiate for "paid" or "settled."
• Finally, there is one more thing to consider. Once you start down this road, you are announcing that you have the money to pay your past obligations. If the negotiations break down, they may take you to court and force a judgment, which may include interest, court costs and legal fees.

Good luck with the negotiations.