GUIDE TO REMOVING DEROGATORY INFORMATION FROM CREDIT REPORTS ON DEBTS THAT ARE PAID OFF BY DEBTOR

GUIDE TO REMOVING DEROGATORY INFORMATION FROM CREDIT REPORTS ON DEBTS THAT ARE PAID OFF BY DEBTOR

Many times debtors going to pay off delinquent debts which have been charged off by a creditor. The charge off is reflected on the debtor's credit report and therefore, even if the debtor pays off the debt, the derogatory information remains on the credit report for seven years.

There may be a method of removing the derogatory information in consideration of the debt being paid by the debtor. Before offering to do so, a debtor should draft a settlement letter, a sample of which is attached. If the creditor refuses to sign the settlement letter, a debtor may decide not to pay off the debt because the payoff will not improve his or her credit report.

You will note that the key sentence in the letter regarding the credit report is as follows:

"You agree to retract all negative or derogatory remarks you may have reported on my credit with any credit reporting agency located in the United States."

"You agree to retract all previous negative or derogatory remarks you may have reported on any previous account."

Even if the creditor signs this document, the debtor should after thirty days after the payoff request a copy of his or her credit from each of the three credit bureaus. If the item has not been removed, a debtor should ask the credit bureaus to reinvestigate the item. If the credit bureau conducts the investigation it was learn that there was an agreement for the removal of the derogatory information in consideration for the payoff and therefore the credit bureau will most likely remove the derogatory information.

If there are any questions concerning this procedure, feel free to call us.

SAMPLE LETTER

Creditor Name
Address

RE: Settlement of Account
Your Account Number

Dear:

I am willing to settle the outstanding balance on my account referred to above for $ as full and final settlement of my disputed debt owed to .

By accepting this letter of settlement/agreement, you agree on behalf of to the following:

1) You agree to accept a total of , as an agreed full and final settlement of all outstanding charges/fees on the disputed account referenced above.

2) You agree to cease any and all attempts to collect this debt, either directly or through a collection agency.

3) You agree not to sell this debt to any third party since you now recognize this account to be "Settled As Agreed".

4) You agree to retract ALL negative or derogatory remarks you may have reported on my credit report with any credit reporting agency located in the United States.

5) You agree to retract ALL previous negative or derogatory remarks you may have reported on any previous accounts.

I AGREE TO THE TERMS STATED ABOVE:

Signature of Creditor Title Date (or Agent of Creditor)

Upon receipt of the executed agreement, I will forward to your office the agreed settlement amount via Certified Mail and you will be responsible to retract immediately any and all negative reports concerning these accounts.

Thank you for your cooperation in this matter.

Sincerely,
Your Name

DISPUTED ACCOUNT SETTLEMENT

Settlement Agreement by and between of (Creditor); and of (Debtor).

Whereas, Creditor asserts to hold a certain claim against Debtor in the amount of $ arising from the below described transaction .

And whereas, Debtor disputes said claim, and denies said debt is due.

And whereas, the parties desire to receive and forever settle and adjust said claim.

Now, therefore, Debtor agrees to pay to Creditor and Creditor agrees to accept from Debtor simultaneous herewith, the sum of $ in full payment settlement, satisfaction, discharge and release of said claim and in release of any further claims thereto. Creditor acknowledges that there shall be no adverse report filed against Debtor with any credit bureau.

This Agreement shall be binding and inure to the benefit of the parties and their successors, assigns and personal representatives.

Signed this Day of , 1997.

Witnesseth:

Witness
Creditor

Witness
Debtor

Better Business BureauAddress:   Jerome S. Lamet, Supervising Attorney
542 S. Dearborn Street #1260
Chicago, IL 60605-2090
Telephone:   (877) 833-5227
Monday - Friday 9:00 am - 5:00 pm CST

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