How to Settle an Unpaid Charge Off Withthe Original Creditor

Unpaid charge-offs on your credit report can immediately stop mortgage and auto loan approvals. Charge-offs indicate that you stopped paying on a debt. These negative items lower your credit score, and a charge-off can stay on reports for seven years. But if you are looking to make credit improvements, you can negotiate a settlement with your original creditor.

Instructions

1

Assess your finances before contacting the original creditor. This helps determine how much you can afford to spend when settling a charge-off.

2

Call your creditor to see if the company still holds the debt. Some creditors sell charge-off accounts to collection agencies. You can negotiate with the original creditor if it has not sold the account. If the creditor sold the debt, contact the collection agency to negotiate a settlement.

3

Ask to speak with someone who has the authority to negotiate a debt settlement. If the original creditor hasn't sold the debt to a third-party company, tell the representative of your plans to pay an unpaid charge-off, and then ask to speak with someone with power to negotiate a settlement. Inquire about the balance plus interest and other fees.

4

Offer to settle about 20 percent of your outstanding balance. This is a low offer, and your creditor will likely counter with a much higher amount. Negotiate and meet the creditor halfway, and do not agree to pay more than you can afford.

5

Prepare to settle the charge-off with one lump sum payment. Some creditors only negotiate settlements on unpaid charge-offs if you agree to one-time lump sum payment.

6

Ask the creditor to delete the charge-off from your credit report as part of the agreement for satisfying an unpaid charge-off. If the creditor will not delete the negative item, ask it to update your file to read "paid charge-off."

7

Forward your payment only after you receive written confirmation of the settlement agreement in the mail.