Collections and charge-offs on your report?We can help.
Seeing collections and charge-offs on your credit file can be scary. We can help you understand why they appear and what to do about them.
Not sure if you have collections and / or charge-offs? View your full credit file to find out.
What is a charge-off?
This is an accounting term for a debt that a company has written off as a loss. When you miss payments, the company often tries to collect the debt, often through its own collections team. After about six months with no luck, it writes the debt off its books as a loss and the charge-off appears on your credit report. You still owe this debt.
At this point, they can decide to keep chasing it themselves or sell it to a collections agency.
What a collection is
A debt that's been handed to an outside collection agency. When a debt is handed to a collection agency, the agency adds another item to the report.
Not every collection starts as a charge-off. Medical bills, utilities, and phone bills often go straight to an agency without a charge-off first.
Why one debt can show up twice
When a charged-off debt is sold, the original company reports the charge-off and the collection agency reports the collection. That's two negative items on your credit report for one debt. This is normal, and it doesn't mean you owe double.
What happens when you pay the debt
Paying a collection doesn't take the collections item off your credit report. The line changes to say paid, and unless it is disputed, it can stay on your report for up to seven years.
The only exception to this is collections for medical debt. If you paid a medical collection, it shouldn't be on your report at all (opens in a new tab). If the original debt was under $500, it shouldn't be there either. And nothing medical can be reported until a full year after you saw the doctor.
Medical bills are also the most likely to be wrong. Insurance is frequently billed late; providers sometimes bill the wrong plans, and bills are sent to old addresses.
If you have a collection on your credit report and haven’t paid yet, it is still worth paying. A paid collection looks better to lenders than an unpaid one, but any collection can be a red flag to a lender.
What can we dispute?
We can dispute any collection that is inaccurate, outdated, unverifiable or misleading. This might include:
- A debt that was sent to collection in error
- A date of first delinquency that moved
- The same debt listed twice, by the original company and by a collection agency
- An account that was never yours
- A balance you already paid off
- A medical collection that should have come off
If an item is accurate, current, and the company can back it up, it can’t be disputed and will stay on your report.
Your rights when a debt is in collections
Ask the collector to verify the debt. A debt collector has to send you a notice about the debt. If you dispute it in writing within 30 days (opens in a new tab), the collector has to pause collecting the amount you dispute until it responds to you.
Old debts come off your report. Federal law generally doesn't let a collection or charge-off stay on your report for more than seven years (opens in a new tab). The seven years start 180 days after you first fell behind on the account.
If you served on active duty. Federal law caps interest at 6% (opens in a new tab) on debt you had before your active duty began, and a lender isn't allowed to report you negatively for using that right. If one did anyway, that's something we can challenge.
There are additional options available, but which ones apply to you will depend on your individual history. We'll review your history together to determine which options are most appropriate for your situation.
How we can help
We can help you get inaccurate, outdated, unverifiable or misleading collections and charge-offs removed so they don’t hurt your financial future. Our first step is to pull your report and read it with you so you see exactly what your collections and charge-offs look like to lenders. You identify which items you’d like to dispute and we’ll take it from there, staying compliant the whole way.
See if you have collections or charge-offs and what you can do about them.
We’ll show you exactly what’s on your file and how it might be affecting your credit.
This is a soft credit pull, so it won’t impact your score.