Ive paid the debt but still have a “charge off”?

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Ive been making payments to fully pay off a debt with a cc company for almost a year now and have recently completed my payment obligations. I have never heard of a “charge off” until trying to apply for a small loan to help rebuild, what i thought, was a clean slate on my credit report, only to find out I have a charge off.

I understand what a charge off is.Im just wondering if this negative mark on my credit report is going to be on it for up to 7 years what the heck is the use of paying all the money that i have? I was completely unaware of a charge off and was under the impression when you pay off the money that you owe your credit would improve…ya i know it wont fix it back to normal cause creditors can see the history of my credit…im sure you get my point…anyway anyone have advice as to what to do next?

3 Comments
  1. Reply
    CatDad
    August 2, 2011 at 8:59 am

    When a credit card completely defaults, this is noted on your credit report as a “charge-off.” This will stay on your credit report for 7 years. A charge-off is one of the worst things than can happen to your credit rating. When an account is charged-off, the damage is done and it can’t be undone by later cutting a check for the entire amount of the default. It is very important to understand that paying back a charge-off will not fix your credit. Your credit report will be updated to a “Paid Charge-Off,” which, while slightly better, is still a seriously derogatory item. A charge-off, whether paid, settled for less or not paid at all, will remain on a consumer’s credit reports for up to 7 years..

    The credit reporting system regarding paying back old credit card defaults/charge-offs is clearly unfair. If you’re going to pay off charge-offs, then you might as well negotiate the lowest, rock bottom settlement you can possibly get, being that the negative charge-off notation is going to stay for 7 years on your credit report, regardless of whether the charge-off is paid or unpaid.
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    I hope you got a written settlement agreement from the debt collector….if not, don’t be surprised if they come back demanding more money after they’ve already been draining your bank account for over a year.

  2. Reply
    Swanky
    August 2, 2011 at 9:51 am

    The answer from Cat Dad is spot on! The only thing you have done by paying back the amount you owed is to protect yourself from being sued. Depending on the company and amount owed you may have never been sued for the debt. Creditors use high pressure tactics to get you to pay the money because it will cost them time and money to sue you and they often just write off the debt if you do not pay.
    That being said there are still laws in place to help you restore your credit rating. If you would like information on credit repair and how it can help get you back on track send me an email. brandy@acreditclinic.com

  3. Reply
    My Take on It
    August 2, 2011 at 10:10 am

    Try to get that creditor that you paid off to place a note on your report that you have Paid in full your obligation.

    The charge off itself will not come off your report, as it is an accurate entry.

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