How to Negotiate a Charge Off

How to Negotiate a Charge Off
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Accounts are charged off when you have not made a payment in 180 days. To charge an account off means a credit card company is reporting it as a loss, for tax purposes, due to the uncollectable nature of the account. The account is then reported as a charge off on your credit report and turned over to a collection agency. Collection agencies will attempt to collect the balance using various resources and techniques.

Call the collection agency. Let them know you wish to negotiate the charge-off balance. Find out where the payment should be mailed.

Ask the collection agency--during negotiations--to have the derogatory credit information removed from your file. This decision is up to the agency. Get everything in writing.

Determine how you will pay the account. If you have a large balance which you cannot pay off all at once, monthly payments may be more feasible. Make sure your monthly payment does not overextend your budget. The collection agency will send written correspondence to acknowledge receipt of your payments.

Negotiate a cash settlement, which allows you to receive a large discount--sometimes as much as 20 percent to 75 percent off the outstanding balance. Collection agencies purchase these accounts for a small percentage of the balance, and this leaves you plenty of room for negotiating. Be prepared to make a lump-sum payment in this case.

Send your payments to the agency. Once you have decided how you will pay your outstanding balance, wait for the collection agency to send you written correspondence summarizing the terms and conditions. If you send your payment to settle the balance in full, wait 10 days to make sure the payment has been received. Follow up with the collection credit reporting agencies to see if the information has been removed from your credit file.

Review your credit report status. If you cannot get the charge-off information removed from your credit through negotiations, it remains on your file for seven years. After this time frame has passed, you can send in a letter of dispute to the credit-reporting agencies to have the information removed.


  • You can get a free copy of your credit report from every 365 days. This site allows you to get a copy from all three major credit reporting agencies, including Transunion, Experian, and Equifax. Credit scores range from 300 to 850 and are used by lenders to determine your level of risk. The higher your score the better chance you have of receiving favorable loan terms.


  • Derogatory credit information will lower your credit score and hinder your ability to get credit in the future.