How to Negotiate a Chargeoff With the Original Creditor

How to Negotiate a Chargeoff With the Original Creditor
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A creditor will often charge off your debt if you do not make any payments for six months or more. Technically, a creditor is writing off your debt as a loss. Do not be fooled into thinking that you no longer need to pay off that debt; you do. Most creditors will sell charged-off debt to a credit collection agency. You can attempt to pay off a debt that has been charged off in an effort to improve your credit history.

Order a copy of your credit report to look for accounts that have been charged off. If you have an account that is listed as having been charged off, you will want to look for the last listed date of activity on your account. According to Suze Orman, a charged-off account cannot be reflected on your credit report once seven years have passed since the last date of activity. File a dispute with the credit reporting agency if the last date of activity was more than seven years ago.

Gather documentation for the credit account that has been charged-off if it is less than seven years ago. You will want to review details on how many months your account was past due before it was charged off. Pay close attention to the balance of the account that was charged off. If the account is with a credit collection agency, there will be additional fees tacked onto the balance. Search for the original balance minus these fees.

Determine how much money you could pay on the total balance that is due to the original creditor. Consider offering a minimum of 60 percent of the balance for a payoff request. If you are not able to make a large payment, you will need to decide how much money you can afford to pay each month over the course of the next few months in order to make a payoff payment arrangement.

Contact the original creditor and immediately ask to speak to someone who has the authority to make payment arrangements on delinquent accounts or those that have been charged off. You will want to propose your payment offer to the original creditor. Be polite when asking the customer service manager to consider your payment agreement.

Notify the creditor that you will only be able to complete the terms of your proposed payoff arrangement if the creditor will remove your charge-off from your credit report. Many creditors will indicate that you paid off your charge-off but will not remove the charge-off notation. You must clarify to the creditor that you can only make the payoff agreement if they report your account as having been paid in full. You do not want the account updated to state "paid charge-off," which would have as much of a negative impact on your credit as simply leaving the account listed as having been charged off.

Ask the creditor to send a written payoff agreement if they accept your offer. Make it clear that you will need to receive acceptance of your agreement in writing that will clearly state that the creditor will remove the charge-off from your credit report once you pay off the total amount that you have promised. The creditor might ask you to sign and return a written agreement that they send.


  • Remember, the credit collection agency has no authority to update your credit report. You must negotiate a charge-off with the original creditor.