How to Charge-Off Less Than the Full Balance of a Credit Card

A partial charge-off is an action taken by a consumer loan lender. Full charge-offs occur when a lender deems an account "uncollectible" and either writes the account off as a loss or sells the account at a lesser value to a collection agency. Both situations do not relieve you of the debt. However, in some extraordinary cases, partial charge-offs are awarded on consumer loans.

Instructions

1

Review all of your bills and your income. Do a debt-to-income ratio calculation (DIR). To do this, divide the sum of all monthly bill payments by your gross monthly income. If your DIR is well above 50 percent, you may have a chance for a partial charge-off. A high DIR may persuade a lender to at least review the option.

2

Request a specific amount to be charged off. This can be either a dollar figure or a percentage. A specific number will tell the lender than you've done your homework, and have worked out what payment you'll be able to afford if a partial charge-off is granted.

3

Draft a letter of explanation. This should be somewhat personal. If you've experienced a loss of employment, a medical procedure or a disability, this is the place to go into detail. Creditors want to see good faith and a full explanation of your hardship.

4

Draft a goodwill letter. This is a professional business letter. It should include the account number, the date, your name and address, social security number, the specific amount you are requesting be charged off, and what the resulting balance will be.

5

Make copies of both letters, account statements and any other documents (like income documents) supporting your request. Send all of these documents to the creditor with the goodwill etter on top (see Resources for a sample goodwill letter).

6

Wait. It is up to the lender's discretion whether or not to approve the partial charge-off. It is by no means guaranteed.