I plan to pay charged off dept, all of it, does it matter how I pay it as long as i pay something?

Question

Basically, no excuses here, but poor money management, We are now living on a true budget. And part of that budget is to start paying down our bad debts, while making sure we still pay our currrent obligations. Thanks

Answer 1

it does not matter.  You should not pay the full amount.  You should ask the company to negotiate the  full amount down.  They have purchased the debit at a discount, and taken tax discounts because of the debit.  They will also send you a bill for whatever you negotiate as income.  Which you are responsible to pay the taxes on.

Everybody makes out in the game except you.  Make sure they agree to list the debit as payed in full not charged off.  Also do not pay a dime without an agreement in writing.

Also do not give them access to credit card numbers, or bank account numbers.  

Debits have lifetimes.  Each state is different, but their is a finite time the debit is alive.  Do not give the debit a new life buy paying on it, or acknowledging it..

Go get the Kevin Truedueaux book.  - it will point you in the right direction of what is possible, and is not.

Answer 2

Do not just send small payments.   Your charged off debt has probably been sold to a collection agency. Just sending small payments will only keep resetting the Statute of Limitations (SOL).  They will probably take your payments but often you balance won't go down at all -- interest, fees, whatever.

Before you pay anything, get a written settlement agreement.  Depending on how old this debt is, you might be able to settle for less than full balance.  But you definitely want a detailed payment plan -- specific number of payments, specific amount, due on specific date.  

Absolutely do not allow the collector direct access to your bank account.  And be sure to make all your payments on time.

If the debt is over 3 years old, offer 25%; 2 or 3 years old, offer 50%; less than 2 years old, offer 75%.  Lump sum gets the best deals.  Payment plans have to be short term -- less than 6 months.  It would be very unusual for a collection agency to agree to a one year repayment plan

Paying your old debt won't improve your score as the damage is already done. But paid old debt looks better than unpaid and creditors look at your whole credit file.