Question. In January 2008, my house was foreclosed on and the house was sold in an auction and the first bank was paid off. I had a 2nd mortgage where I have a charge off of $75,000.00 on my credit report.
How can I have this removed from my credit report? Is my only option bankruptcy? Or is there another option I can work on?
Answer. You can dispute the charge off and see what happens. But even if it is removed, it may be put back on your credit report at some time in the future as long as the debt remains unpaid.
If you reside in a state which allows the mortgage company to come after you for a deficiency judgment, it is not likely you have heardthe last from the mortgage company.
A charge-off is merely an internal accounting procedure which allows the bank to claim the loss for tax purposes. It does not mean they will not seek payment for the debt or sale the debt to a collection agency.
Filing Bankruptcy. I am not an attorney and therefore cannot advise on bankruptcy. However, I would definitely seek legal consultation regarding your options for bankruptcy. You may be able to qualify for a Chapter 7 Bankruptcy proceeding which would mean they can no longer pursue you for the debt. As long as the debt is unpaid they can pursue you.
When contemplating bankruptcy take into consideration a bankruptcy can remain on your credit report for 10 years. However, it may give you clean slate in which to begin rebuilding your finances and credit history. Once a bankruptcy has been discharged you can begin a good credit rebuilding plan and have a credit score above 600 within 6 to 9 months.
Negotiate a Settlement. The only other option I see is to work something out with the mortgage company if you are able to keep up with payments. In order to avoid a total loss, the bank may be willing to reduce the amount owed and offer you a 0% interest payment plan.
Additionally, if they are willing to settle you can also negotiate a better credit rating and possibly have the charge-off removed or changed to “paid as agreed”. I know it’s a lot to think about, good luck to you.
