How to Remove a Charge-Off Without Paying

A charge-off occurs when a creditor writes off a debt that’s unlikely to be paid. Having a charge-off on your credit report is considered a negative mark and may affect your approval for future credit.

If you have a charge-off on your credit report, you might wonder, “Is it possible to remove a charge-off without making a payment?” We’ll dive deeper into charge-offs, strategies for addressing them, and whether you can remove a charge-off without paying.

What is a charge-off?

A charge-off happens when a lender decides to write off an account as a loss because it’s unlikely the borrower is going to pay the debt. The lender sells the account to a debt buyer or sends it to a collection agency.

Even though the lender writes off the account, the borrower is still legally responsible for the debt as per the lender’s agreement. This means the lender can file a lawsuit and report the delinquency to the credit bureaus.

Charge-offs can appear on a credit report for several reasons:

• The borrower hasn’t made a payment in 90-180 days.
• The borrower has made all their payments, but they’ve been late.
• The borrower’s payments have been less than the minimum amount.
• The lender made a mistake with payment or account information and incorrectly reported the charge-off.

A charge-off is a negative mark on a credit report because it means the person borrowed money but failed to repay it as agreed. This warns other lenders about what to possibly expect if they approve the borrower for a loan or credit.

To give you an idea of how serious a charge-off is, your credit score can drop 50 - 150 points because of a charge-off. What’s worse, even if you settle the debt, there’s no guarantee the charge-off will be removed from your credit report before it automatically cycles off after seven years.

How can I remove a charge-off without paying?

We’ll discuss common strategies for trying to remove charge-offs from a credit report and the potential effectiveness of each strategy.

Dispute the charge-off

If the charge-off is because the lender has made a mistake, start the dispute process immediately! This mistake can affect many areas of your life other than being approved for new credit.

Request debt verification

Before you can dispute an inaccurate charge-off, you have to request verification of the debt. You’ll need this information as part of your dispute process.

To request verification of the debt, do the following:

1. Write a Debt Validation letter to ask the debt collector for:

• The reason why the debt collector believes you owe the debt.
• The amount of the debt.
• The date when the debt went into delinquency.
• The name of the original creditor.

2. Once you’ve written your letter, make a copy to keep for yourself. When you mail the letter, send it by Certified Mail so you have proof you sent the letter.

3. If you don’t receive validation within 10 days of the debt collector receiving your letter, ask for debt validation the next time they contact you.

Dispute an inaccurate charge-off

Once you have the debt validation information, you have 30 days to dispute any inaccurate information in writing. Here’s how to dispute an inaccurate charge-off:

1. Send a dispute to the debt collector. This is you telling them, “This isn’t my debt.” Look for dispute letter templates online if you need help.
2. Send a dispute to the credit bureaus. Write to each credit bureau that shows the charge-off. Clearly explain what you believe is wrong about it and provide copies of your supporting documentation, including your dispute letter to the debt collector. You may also have to fill out a dispute form for each credit bureau, so look for one online. You may be able to do this entire step online for faster results.
3. Wait for the credit bureau investigation. Once you send a dispute to a credit bureau, it must conduct an investigation. If evidence shows the charge-off is a mistake, the credit bureau will correct or remove the errors on your credit report.
4. Check your credit report. You don’t want another charge-off error to appear on your credit report, so make a habit of regularly checking your credit.

This takes work and time, but it’s worth getting your credit restored.

Request a goodwill adjustment

If your late payments were a temporary departure from good credit behavior and you’re able to make on-time payments again, consider requesting a goodwill adjustment. This is when you ask the lender to remove the charge-off from your credit report as a gesture of goodwill.

A goodwill letter should:

• Be brief, polite, and to the point. State right away that you’re writing to request a goodwill adjustment to remove the charge-off from your credit report.
• Explain the circumstances that led you to make late payments (reduced income, loss of job, high medical bills, etc.).
• Show that you take full responsibility for your late payments.
• Include your personal contact information: phone number, address, and email address.
• Tell the lender how you plan to handle credit responsibly going forward.
• Explain how the adjustment will positively affect your credit and help you get back on track.

You should also save a copy for yourself and mail your letter to the lender’s customer service mailing address via US Postal service. Don’t send an email.

Be humble in your letter – you’re asking the lender for a (big) favor. You should also understand the lender isn’t obligated to honor your request. Some lenders have formal policies stating they can’t honor goodwill requests for any reason.

If you don’t receive any response from the lender, you may have to write follow-up letters.

Negotiate a pay-for-delete agreement

A pay-for-delete agreement is when a debt collector agrees to remove a charge-off in exchange for full or partial payment of the debt. Getting a pay-for-delete agreement takes negotiation skills because you’re typically asking the collector to forgive a legitimate debt you owe.

It also falls into an ethical gray area of credit reporting, and some collectors have agreements with the credit bureaus that prohibit removing accurate debts from credit reports. Even if a debt collector agrees to a pay-for-delete, but the original lender doesn’t, the charge-off can stay on your credit report. Pay-for-delete isn’t always successful.

If you decide to pursue the pay-for-delete option, follow these steps:

1. Contact the debt collector by calling or writing to them. Google “pay-for-delete letter sample” to find a template.
2. Make your offer over the phone call or in the letter. Tell the debt collector you want to pay the full amount of the debt, or the amount you can afford to pay, in exchange for removal of the charge-off from your credit report.
3. Come to an agreement with the debt collector and make sure you understand every detail.
4. Get the agreement in writing before you make any payment.
5. Make your payment by the due date, in the amount you agreed to. Otherwise, you void the pay-for-delete agreement!
6. Follow up with the collector to make sure they remove the charge-off from your credit report.

Remember, pay-for-deletes are controversial and may have no effect on newer credit scoring models. You might successfully negotiate a pay-for-delete only to find you still have bad credit.

Seek professional help

A credit repair company or professional offers services to try to improve your credit by disputing errors and dealing with negative information like charge-offs.

Some of the pros of using professional credit repair services are:

• Experience. They’re familiar with debt collection practices and understand the laws governing credit bureaus and credit reporting.
• Representation. Disputing inaccurate credit report information and negotiating debt is time-consuming, frustrating, stressful, and exhausting. A credit repair company does the unpleasant work of dealing with angry debt collectors.
• Negotiation skills. Sometimes it’s intimidating to stand up for ourselves and ask for what we want. Credit repair companies know how to persuasively negotiate with debt collectors for their clients.

But there are cons to credit repair companies to know about before using one:

• Cost. You have to pay to use a professional credit repair company, and some of them charge high fees.
• No guarantees. There are numerous reasons why charge-offs aren’t removed from credit reports.
• Scammers. If a credit repair service promises to get negative information removed from your credit report, or fix things with just a few phone calls, it’s a red flag that you might be dealing with a scammer!

If you find the idea of dealing with debt collectors and the credit bureaus too overwhelming, find a well-known and reputable company to speak with. Look for a company with:

• Lots of positive Google reviews from customers.
• High Better Business Bureau ratings.
• Easy-to-understand cost and fee structure.
• Detailed terms and conditions you can easily understand.
• Realistic expectations they set with you.

If a credit repair company asks you for money up front, makes guarantees to fix your credit report, or asks you to falsify information to lenders or the credit bureaus, these are violations of the Credit Repair Organizations Act and you shouldn’t work with the company.

Avoiding debt repayment: things to keep in mind

While trying to remove a charge-off without paying the debt might sound tempting, you should consider the risks and legal consequences of doing so.

Potential risks

Trying to remove a charge-off from your credit report without paying carries potential risks you should be aware of:

• It doesn’t help your credit score. If you get the charge-off removed, the original delinquency still affects your credit history.
• It doesn’t stop collections. While you’re trying to get the charge-off removed, the collection agency can pursue collections and take legal action.
• It can show up again. Unpaid debt can pop up again on your credit report through a different debt collector or lender after a charge-off is removed.
• It can waste time: You might spend months trying to remove a charge-off, only to find yourself in the same credit situation you started in. You’d be better off focusing on positive steps to start rebuilding your credit.

Even if you’re successful in getting a charge-off removed from your credit report, unpaid debt can hurt your credit for a long time.

Legal considerations

Removing charge-offs also comes with complex legal factors to consider.

• Statute of limitations. After a certain period, creditors can’t sue to collect debt. This time period varies by state and isn’t the same as how long charge-offs can remain on your credit report.
• Confirmation of breaking lender agreements. Negotiated agreements to remove charge-offs have to be confirmed in writing and state you no longer owe money, collections will cease, and your credit report will be updated.
• Consequences of misleading lenders. If you falsify information to a lender to remove a charge-off, you can face serious legal consequences.
• Right to debt validation. You’re legally entitled to debt validation. If a collector refuses, you may be able to dispute the charge-off with the credit bureaus.

Attempting to remove a charge-off is a process with many aspects to consider beforehand.

Removing a charge-off without paying isn’t easy

When individuals have charge-offs on their credit reports, there are options they can pursue to try to have them removed. They can dispute an inaccurate charge-off, request a goodwill adjustment, negotiate a debt-for-payment agreement, or hire a credit repair professional. The most successful scenario is when the charge-off is the result of a lender error.

There’s no quick or easy fix for getting a charge-off removed from your credit report and it’s becoming harder to do. Legitimate charge-offs often stay on credit reports, even after being fully repaid, so you’re unlikely to remove one without paying something. Use caution, consider things carefully, and use informed judgment in your decision-making.