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Collections Law/Falsely charged off credit?

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Question
Hey, just a quick question.

When I was in college managed to wrack up about $1500 in credit card debt in 2011, which I then neglected to pay off.

The accounts disappeared from my online banking in 2013 and the bank stopped calling and so, out of sight out of mind, I forgot about them. I then checked my credit report one day and found that the accounts were being reported as "charged off" and had been for about a year, dragging my credit score way down.

I called the bank and it turned out they hadn't sold the accounts to any third party collections agencies yet and I was able to set up regular payment plans that would have the debt paid off within the year.

Now thats all said and done, one question remains: If they hadn't actually sold the accounts yet, why were they able to report them as charged off? Those reports are what's damaging my credit, so if they were reporting illegally or prematurely I'd like to know and have those reports removed from my record. It just seems weird that they'd be reported as charged off a year ago when the bank is still in possession of the accounts and I now have active payment plans WITH the bank...

So what's the deal here? What can I do?
Thank you

Answer
A "Charge Off" is an accounting term meaning the bank has removed the account from its paying customers ledger to its "bad debt" ledger. This is required to be done when an account becopmes 6 months past due.

Unfortunately, the damage has already been done and paying the account now will have very little effect on your credit file. A "Paid Charge Off" is very little better than an "Unpaid Charge Off" - it's the words "charge off" that are he killers.

While the bank may agree to a "pay for delete" - meaning if you pay off the account they will deletethe Trade Line, don't count on it. It rarely happens.

Collections Law

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Steve Katz

Expertise

Debt Collection, Credit Reporting, FCRA, FDCPA, TCPA issues

Experience

Founder of Debtorboards, co-author of Debtsmanship, former Collector, Credit Counselor

Education/Credentials
MBA

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