- 1). Contact those creditors that have not yet turned your account over to collections. Explain that you are having difficulty paying your bills, and ask if they can help you by canceling fees, lowering your interest rate or setting up a payment plan. Charge-offs cause significant damage to your credit score, so preventing them should be a top priority.
- 2). Review your credit reports. If you find errors, contact the credit bureaus and ask them to investigate. It usually takes about 30 days for the investigation to be completed.
- 3). Approach the collection agencies that own or manage your charged-off accounts with a settlement offer. If you have some cash, explain that you are unable to pay the full amount, but are willing to pay a percentage to settle the account. If you have significant cash available to you, offer to pay the entire amount due in exchange for the removal of the negative item from your credit report.
- 4). Continue to monitor your credit reports. Some unscrupulous companies specialize in buying up old debts, which may or may not even be legitimate, and intimidating the alleged debtors into paying them. Some of these companies will even place negative information on your credit report despite the fact that the debt is past the time limit for credit reporting (seven years for most items, 10 years for bankruptcy). Request an investigation of any new items on your credit report that you think are the result of very old debt or debt with which you are unfamiliar.
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