My son-in-law is trying to fix negative items on his credit report......?

Question

there are several things from a few years ago that were "charged off" and have an unpaid balance. Should he contact those creditors and pay the balance? Or will it still count as a mark against him because they weren't paid on time?

Answer 1

He should pay the balances on the charged off accounts.  They will still list in a derogatory manner, but it will hurt his overall scores more if there is a balance on those charge offs.  This further shows creditors that they are more likely to get their money back rather than have it not paid.  It will also increase his credit score.

Answer 2

You can pay them off if you want, but they will still count as a negative, until this item comes off, or is disputed off.

Answer 3

Depends on how long it's been since the account has been 'charged off'. After 7 years it comes off your credit report anyway. But, if he wants to make the debts good, then he could contact them and most of the time they will take a 'settlement' which means you don't pay the full amount of the debt, but it's considered paid. But before I did this I would make sure the company sent me a fax or a letter stating that they are accepting X amount of dollars for the account, and SOMETIMES you can even get them to take it off your credit report, but have them put that in writing too. Now, all that being said, in general, if you pay off a bad debt, it will still say on your credit report that is a "paid charge-off". Also, if he doesn't make a 'one lump sum' settlement & he decides to send them money, the date of the charge off originates from the last date of activity. So if it's 6 1/2 years old & he makes just 1 payment, and decides NOT to pay anymore, then he has 7 more years to wait before it comes off his credit report.

Answer 4

Some creditors will allow you to re-open the account when the balance is paid off/ with a lower limit but this would have a big improvement on his report.

Answer 5

You can use credit repair agency, for example this one - http://creditreport.fateback.com

They will clean lots of such bad stuff from your credit report - and do it much faster than yourself, so your credit will go up.

You will spend lots of time by personally doing it... I guess you are not a lawyer.

Answer 6

The IRS allows creditors to charge off debts that have become worthless. The rule is called the "Specific Charge-Off Method". In a nutshell, this rule allows creditors to take a loss on their income taxes when a debt they are trying to collect becomes worthless. Companies do not actually have to go to court to prove the debt is uncollectible and they can still try to collect the debt at a later date. If they are successful in collecting the debt (or any part thereof) they must claim it on their tax return in the year collected.

Even if he was to contact them and pay, the damage has already been done to his credit rating.  It would look better to see it reported as paid but that won't change his score a lot.

He can contact them and set up a payment plan.  If they accept and he pays on time every time, then it will show as :"paid as agreed" on his credit report.  Even better if he can pay them off then the entry will be removed as a derogatory entry

Hope this answers your question

LEGAL DISCLAIMER:  The advice contained herein is for informational purposes only.  It is not to be construed as Legal Counsel nor Legal Advice.