The Better Credit Blog | Answering Your Credit Questions & Free Negotiation Dispute Letters

Negotiating WAMU Charge off

Reader’s Question

Dear Ryan,
I am attempting to negotiate payment in full of a charge-off with WaMu in exchange for removing the tradeline from my credit report. I wrote a letter similar to the one  you’ve made available on this site (thank you!) and received a response that says WaMu’s records are correct and if I have issues with my credit report I should take it up with the three credit reporting agencies.

I’m not sure what to make of this. My thought was to send another letter thanking them for the information but informing them they missed the point (very politely and graciously, of course) and restating my proposal.

In closing the letter I wrote “upon receiving your written agreement, I will immediately begin payments… ” but their letter was not an agreement and didn’t address my proposal. So if I send another letter, and include your closer of “your written response will serve as agreement,” will I have to immediately begin payment upon a written response of any kind?

What are your thoughts? Should I send another letter? Or should I start making payments as I proposed?

Thanks a lot for making your stories and resources available.

regards,
[name removed]

Response

Hi [name removed]

Don’t start making any payments until you get something in writing from them honoring your proposal. How old is the charge off? If it’s a fairly new charge off (within 5 years), you’re going to have a real difficult time getting them to remove it from your credit report. Your best bet (perhaps your only chance) is to offer to pay the balance off in FULL –one payment.

Hope this helps,
Ryan

Posted in Reader Questions | No Comments »

Can I deal with original creditor after a charge off?

Reader’s Question

Hello Ryan -
I had an account with Citi that went to collections after a charge off, can I bypass the collection agency and call Citi directly?

Thanks!
[name removed]

Response

Hi [name removed]

Yes, in most cases you can do this. As a matter of fact, I recommend always calling the original creditor first –that way you don’t have to deal with scum bag collection agencies.

-Ryan

Posted in Reader Questions | No Comments »

Ripped Off By Debt Collector On A Charge Off

Reader’s Question

Hi Ryan,
I wish I would have found your blog sooner. Last summer I made an arrangement with a debt collector over the phone. This arrangement was for a XXXX-XXXXX account that was in charge off status for the past year or so. The debt collector said that if I paid $867, the account status would be changed on my credit report from ‘charge off’ to ‘paid in full’. Instead after I paid him, my credit report was updated to ‘paid charge off, $1400 written off’. My credit score only went up 4 points. I think you could understand how horrible this felt because I thought I was doing the right thing and I got screwed. My question is, now that I read some of your blog, is there anything I can do?
Thanks,
[name removed]

Response

[name removed],
Unfortunately this happens a lot and there is very little you can do. The problem is that the deal was made over the phone -you can’t prove the scumbag collector made that offer. Trying to communicate with the collection agency now will be useless because they have already been paid. In this case, you can try to dispute the record with the credit reporting agencies and see what comes from it -you never know. Read my post regarding disputing an entry on your credit report. Nonetheless, I recommend that you ‘write it off’ as well and begin rebuilding your credit. Start out by getting a credit card. Check out my recommendations.
Best of luck,
Ryan

Posted in Reader Questions | 3 Comments »

Negotiating With Creditors To Get Negative Records Deleted

Negotiating for a creditor to completely remove a negative record on your credit report will usually increase your credit score more than if you pay the account off and the creditor changes the account status to ‘PAID IN FULL’. This is because even though your credit report may reflect that you have paid off the account, it still shows the history of the account (i.e., late payments).

Before you continue

If you have already made arrangements with a creditor or given them any money, you have lost your power to negotiate!

Negotiating a debt is intimating if you aren’t the “car salesmen type”. In fact, I am advising you against attempting to negotiate a debt over the phone. Keep in mind that debt collectors are not only well trained to get as much money from you as possible, but they also have the advantage of negotiating debts all day, everyday –that’s a lot of practice.

It’s important to remember that collectors project a hostile and very aggressive demeanor over the phone. This naturally puts you at a disadvantage because humans tend to become abrasive and on the defense when in the presence of such behavior. This means that you are more likely to let emotion skew your logic –ruining your chance to negotiate a lower debt.

Instead, I am going to discuss how to negotiate a debt by writing letters. In this situation you have the advantage. Here are a few reasons why:

1. You have time to gather your thoughts and compose a letter that reflects your intention and not your defensive emotions.
2. You are not being rushed and lied to by an aggressive debt collector.
3. Most important: A written correspondence offers you legal protections. On the other hand, if you come to an agreement over the phone and they fail to honor the agreement (it happens a lot), it’s difficult to prove.

There are also disadvantages (or minor inconveniences, rather) to negotiating via mail. Corresponding with creditors through the mail can be an exhaustingly long process –often it can take several months to receive a response. You have to decide if you’re willing (or if it’s worth it) to wait for the peace of mind that a negotiation can provide. I say go for it if you are the type of person that can mail a letter and forget about it. However, if you are the obsessive, nervous type, the waiting period can be stressful.

Your best chances for a successful negotiation

If you haven’t yet made any agreements with the creditor, you have a very good chance. This is because you still have the upper hand –they want something from you, not the other way around. Nonetheless, I have found that some types of accounts can be very difficult to get removed completely from your credit report.

Accounts and success rates

• Closed accounts (ex: Charge off) that have been since paid are extremely difficult to get removed. If you still carry a balance and the creditor is actively attempting to collect, getting a complete removal will have about a 1 in 3 chance of success.
• Open accounts, regardless of the account type (i.e., installment, revolving), that are delinquent have a marginal success rate of complete removal if you offer to pay the balance in full.
• Open/Active accounts that are reported as ‘LATE’ have a very high success rate of complete removal. This is particularly true if the account is in Collections.

Creditors often claim that they cannot remove records from credit reports. This is false. Creditors absolutely have the ability to completely remove a record.

Shooting for the stars

Keep in mind that getting a creditor to completely remove a negative record from your credit report is the best case scenario so try not to get your hopes up too much. However don’t let this bring you down, because you have nothing to lose by attempting to negotiate a complete removal. Also, don’t trick yourself into believing that you can negotiate a complete removal by promising to pay a small amount of the debt. In most cases, the creditor will only consider a complete removal if you offer to pay off the debt in full (or very close), in a short period of time.

To give you an example

I was able to get a $2000 credit card debt in ‘charge off’ status completely removed from my credit report by proposing to pay the creditor IN FULL over a 3 month period.

I hope I have provided you with an informative overview of the negotiation process. Take note that I cannot get too specific on this topic because individual situation are so widely varied. And ultimately your individual situation will determine your chances of getting a complete removal.

Now you’re ready to download My Free Removal Negotiation Letter

One last note: The success rates I have stated in this article are from my own personal experience. Your success might be different. Nevertheless, I’d love to hear how it works out for you, so drop me a line with your story

Posted in Negotiating with Creditors | 3 Comments »