If someone is trying to clean up their credit and there are charge-offs,should they try and pay these off or just forget about them? I have a customer that has really bad credit but wants to buy a home and i have teken it upon myself to attempt to help them clean their credit. They have civil judgements they will pay first and then there are these two charge offs on autos... I am not sure whether they should pay them off or what. I was thinking that maybe if they pay on them for a year and show that they can make the payments for a year it will look good to the finance companies. Any suggestions?
2007-01-29 13:53:00 · 4 answers · asked by amazedmaize 2 in Business & Finance ➔ Credit
I don't think they are eligible for payoff since the very definition of a chargeoff is an uncollectable debt. I don't think it's a chargeoff until the original creditor sells the account to a collection agancy and the collection agency declares it uncollectable after a certain period of time. At that point it is too late because they have closed it out and are done trying.
2007-01-29 14:30:50 · answer #1 · answered by justbeingher 7 · 0⤊ 0⤋
A charge off is the worst possible thing that can happen to a person's credit. What has happened when an account is charged off it means that the debtor has just flat out refused to pay either due to inability to pay or unwillingness to pay.
However, there is good news. Once a debt has been charged off, it is no longer available for collection legally. The companies to whom the debt is owed have either written off the loss on their taxes or have claimed the loss on their insurance and been paid by their insurance company. Either way, there is no longer any legal obligation to pay the debt and no legal way for the debt to be collected by the issuing company.
Though this is your client, I have further advice that I can offer you that will be of great help to them if you are interested. You may email me at nebula7693@yahoo.com and I will respond. Thank you.
2007-01-29 15:08:50 · answer #2 · answered by nebula7693 4 · 0⤊ 0⤋
Paying charge offs over 2 years old won't help your credit. Once an account goes to charged off status there is no changing it, paid or not. The best thing you can do for them is have them open up new credit accounts and pay them on time. Only time and consistency will help them build a better credit record; it won't happen overnight.
2007-01-29 14:03:18 · answer #3 · answered by Kevin K 3 · 0⤊ 0⤋
Many creditors threaten their borrowers with charge-off and make it sound as though it is the end of healthy financial life. This happens if you fail to make regular payments on your bills. This term scares many people. This article explains everything you need to know about charge-off.
As the term charge-off includes the term charge, many people think term means cancellation of the account by the creditor. This means you cannot pay for anything with your credit card. But it not what the banks mean.
2007-01-29 17:12:06 · answer #4 · answered by juli o 3 · 0⤊ 0⤋