When a consumer pays in full a charged off account the balance should credit report as zero with the appropriate status code, “Paid/closed-was a charge-off.”  If the consumer does not pay the full balance after a charge-off as part of a settlement, the account status code credit reported is “Paid in full for less than the full balance.” 

The credit reporting errors that our office sees most frequently related to paid charge-offs happens when the furnisher continues to report a balance after the consumer has made the settlement payment on the account.  The furnisher will continue to report an amount in the balance status even though it has accepted a settlement payment.  Credit report errors of this nature are particularly  frustrating because the credit report continues to report the past due balance as owed when the consumer has paid and settled the debt.  Consumers are contacting our offices looking for a Northern Virginia credit report lawyer who can assist them in having a settled charged off debt report correctly on their consumer credit report. If you have a credit report error, you should contact me at my office in Reston, Virginia at 571-313-0412.

Consumers often encounter a financial set back, which results in credit cards and loans being charged-off by the original creditor or a bankruptcy.  After an account is charged-off with a past due balance owed, consumers may wish to settle the debt for less than full balance owed as a means of beginning to rebuild their credit and credit file. If you are going to settle a past debt with a creditor or debt collector, I would recommend getting the terms of the settlement in writing prior to making any payments, so the obligations of the parties are clear.  Many creditors will not agree to delete derogatory items from your credit file as part of a settlement, but  they do have an obligation to report the debt accurately on your credit file after you make the settlement payment.  Based upon generally accepted credit reporting guidelines authored by the Consumer Data Industry Association, when an account is paid in full for less than the total amount owed, the creditor should report the current and past due balance as zero with a special notation that the account was paid in full for less than full balance.

Paid charge-off accounts credit reporting inaccurately are similar in nature to inaccuracies related to bankrupt accounts previously discussed.  While previous charge off accounts and bankruptcies are bad credit events in the past, the passage of time allows the consumer to rebuild their credit profile.  When credit report errors persist,  the consumer can never receive the fresh start to their credit that they have earned and should hire an attorney to assist them to recover damages for an inaccurate credit file.