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Question By
Robertwf

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Charged off accounts
I have a charged off account from my home town bank and I understand that I am still liable for the debt, but I applied for SCRA Benefits and they told me as a good faith measure that they would open a new credit card with a $1K limit and transfer the charged off balance over to the new account. Now they also told me that they could remove the history from all 3 agencies but that CC was opened in 2002. I am not sure if I should go with this "Plea Bargin" so to speak or just tell them no lets pay off that balance and be done with it? Anyone have some good advice on this?

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If it is a charge off....

Helpful to 3 out of 4 people

In order to legally charge something off the company must count it as a loss on their taxes. If they are counting it as a loss you are required to count it as a gain in the same year they cut the loss and the only way that can be done is if they file a 1099-C with the IRS which is a cancelllation of debt. Without the 1099 C in the year that they are claiming it was charged off the charge off is not valid and you can dispute it as such!

Reply by
patrick1007

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Helpful to 0 out of 2 people

very interesting i will make sure to remember that because i had taken a charge off once just because the mortage broker told me it wont hurt me & it would be more money in my hand if she got my card a charge off and it totally destroyed my prior to that excellent credit & since i needed immaculate credit for my business in the long term that bad choice cost me dearly in many ways..

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Charge Off

Helpful to 6 out of 7 people

Had a charge off from a major banking institution.  Set up payment arrangements prior to charge off and paid more than 75% of the debt and the institution still hit my credit report anyway.  Hurt me like I had not paid a dime.  My experience says leave it alone.  They will take the loss anyway.  It was a no win for me.

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Reply by
Arlanna23

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Helpful to 5 out of 6 people

In order to legally charge something off the company must count it as a loss on their taxes. If they are counting it as a loss you are required to count it as a gain in the same year they cut the loss and the only way that can be done is if they file a 1099-C with the IRS which is a cancelllation of debt. Without the 1099 C in the year that they are claiming it was charged off the charge off is not valid and you can dispute it as such!

 Hope this helps you in the future

Reply by
patrick1007

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Helpful to 2 out of 4 people

me too anyone who advises you to take a charge off & it wont hurt your credit is a LIAR it will hurt & youll wish you had either paid it in full or not paid it at all because the damage is about the same & will be on there along time

but interesting what the other poster said & id read that before on CK

that if the company accepts a charge off they are legally writing off that debt to the IRS as a loss on their taxes so you have to count any charge offs that year as a gain on your taxes on the same year they cut the loss and the only way they can do that is to legally cancel your debt ..and the only way that can be done is if they file a 1099-C with the IRS which is a cancelllation of debt.

Without the 1099 C in the year that they are claiming it was charged off the charge off is not valid and you can dispute it as such!

so if this is still on your credit dispute it & ask for the 1099-c  if they cant produce it they have to remove this from your credit report  because its not a valid charge off..its worth trying if mine was still on my credit  id try too 

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wait about 7 years it will drop off

Helpful to 5 out of 6 people

After 7 years the bad debt will go away.  You can also write a letter to all 3 credit reporting agency telling you story and by law they have to put that letter on you credit report.  But now a days it's all done by computer as far as getting approved for creditj, and the computer can't read a letter.  

Good Luck to you

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Reply by
Arlanna23

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Helpful to 1 out of 1 people

Enter Your Reply

The debt will not necessarily drop off in 7 years. Out of sight out of mind. The 7 year rule means  7 years from the last date they tried to collect on it. Meaning if the account was opened in 2000 and you stopped paying 2005 but they sold your account and the last activity was reported in 2010 then contrary to belief the account is not considered outdared in 2007 however 2017 which is 7 years from the last date of collection activity.

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cancelling out some credit cards

Helpful to 2 out of 3 people

one card i just received macy american express.  i hate that card.  can i cancel it without screwing up my credit?  there might be more to close but this one i really hate

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PAY the chargeoff

I allowed a $4k charge off to drop my 700+ score 100 points. I got declined for a Sears credit card for crying out loud. My pride got the best of me.

Although in principle I was right (always a red flag!), I ultimately realized it's costing me way more then $4k in mortgage interest and paid it off.

My credit score jumped 60 points within a week, thus qualifying me for prime rates. Seriously, people, there is no argument, just pay off these things and reap the rewards. 

A Google search of the 1099-C issue reveals that courts have contradictory rulings on this issue. Yes the collection CAN legally still remain on your credit report for 7 years even with the 1099-C. 

I had no luck with the supposed "pay for delete" method as this is against the Fair Credit Reporting Act. I have yet to read of anyone who's done it successfully.

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Past credit vs new credit

If you had a credit card, say with Capital One, and filed bankruptcy. Is there any chance after 8 years that they would give you another chance with a secured card now? The card that bankruptcy was filed on did have a balance at the time. thanks!!

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Helpful to 1 out of 3 people

Takie the plea bargin but only on the terms that they will take off any occured interest. 

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