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Can I sell a charged off car?

How to Remove a Charge-Off Without Paying

A charge-off shows that you’ve missed some payments in the past. Credit card issuers are likely to be more reluctant to work with you.

Grant Sabatier

last updated February 1, 2023 11 min read

Keeping up with your payments is important to maintain a good credit score. Missed or late payments could lead to a charge-off, which can seriously harm your credit score and negatively affect your personal finance.

Charge-offs make it harder to get a loan or a credit card. Even a paid charge-off can appear on your credit report for several years.

The good news is that there are ways to remove an illegitimate charge-off without paying – or get a legitimate charge-off removed without paying the full amount.

Read on to find out what charge-off means, how it affects your credit score, and how you can remove it.

In This Article

What is a Charge-Off?

A charge-off is when a creditor or lender writes off your debt as a loss for tax purposes because you’ve not repaid it in time.

For a lender to write off your credit card debt, you will typically be at least 90 or 180 days past the due date. At this point, the original lender typically sells your outstanding debt to a third-party debt collector. It becomes their job to collect the charged-off debt.

The debt collection agency can make phone calls, send letters, and even take you to court. The Fair Debt Collection Practices Act states that debt collectors can’t communicate with you at unusual times (before 8:00 am or after 9:00 pm) – so if you receive a call outside of normal hours, be wary of providing any sensitive information over the phone as it could be a scam.

When a creditor writes off your debt, a charge-off will appear on your credit report as a collection account. In addition to the charge-off, you’ll also have a lower credit score due to the missed payments resulting in the charge-off.

These factors can seriously affect your credit score, causing damage that’s difficult to repair. Future lenders won’t see you as reliable because you’ve not been able to make monthly payments and are a lot less likely to work with you.

If you manage to get a loan, you may only be offered higher than usual interest rates or be asked to pay more upfront because of the charge-off.

How to Know if You Have a Charge-Off On Your Credit Report

If you have a charge-off account, the first thing you might notice is a sharp drop in your credit score. You may receive a call, email, or a letter from a collection agency.

The best way to know is to generate an up-to-date credit report. While there are several paid credit report services, free credit report options exist.

You can generate a free credit report annually from each of the three major credit bureaus:

Get this report by visiting this site:

When you’ve downloaded your credit reports, check them carefully one by one. Look for charge-offs or collection accounts (these typically appear in a different section).

It’s important to note that not all creditors report to all three credit bureaus, so a charge-off account may only appear on the credit report of the bureau the creditor uses.

However, collection agencies will typically report to all three credit bureaus.

How to Remove a Charge-Off Without Paying

Charge-offs stay on your credit record for a long time: typically for up to seven years. A charge-off (like any other negative information on your credit report) can lead to bad credit and make it harder to qualify for new credit (e.g., mortgages, loans, or the best credit cards).

When you apply for these services, the loan issuer checks with credit reporting agencies if you’ve missed payments and have charged-off accounts.

So, how do you remove a charge-off? There are two types of charge-offs. Whether you can get it removed depends on its type.

Types of Charge-Offs

A charge-off can be legitimate or illegitimate. Depending on the type of debt, the steps you can take to remove it differ.

1. Legitimate Charge-Offs

Removing a legitimate charge-off from your credit history is more difficult. Accurate payment history of many missed payments to the credit card issuer puts you (the borrower) in a difficult position. You’ll need to pay at least some of your outstanding debt to have it removed. You can do several other things to deal with this – we’ll go into more detail later in the article.

2. Illegitimate Charge-Offs

However, your charge-off may have happened in error. If you find a charge-off account that you don’t recognize or think your charge-off is an error, removing it is much easier. There could be several reasons a charge-off happens in error, such as fraud or simply a mistake on the credit bureau’s part. The Fair Credit Reporting Act (FCRA) allows customers to initiate a dispute to remove an illegitimate charge-off through any of the three main credit bureaus.

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How to Initiate a Dispute through Equifax

If you believe a charge-off was made in error and needs to be fixed, you can dispute incorrect information on your Equifax credit report.

Initiating the process through the credit bureau’s online dispute system is easy.

Here’s what you need to do to file a dispute:

  1. Click “Get started” or “Submit a dispute.”
  2. Follow the on-screen instructions to file your dispute.

Once you’ve completed a dispute, Equifax will investigate your claim, and you’ll have a result within 30 days. If the credit bureau finds that the information is incorrect, they will fix it on your credit report without you having to do anything else.

To check whether a result is ready, return to the online dispute portal and click “Check a status.”

How to Initiate a Dispute through Experian

You can initiate a dispute with Experian via mail or online.

Initiating a Dispute by Mail

You can go down the traditional route and write a dispute letter. Remember to include the following information:

  • Your name and surname, including the middle initial and suffix (e.g., Jr., Sr., III, etc.).
  • Your Social Security number (SSN). If you don’t have an SSN, include a note to inform the credit bureau.
  • Your date of birth.
  • Your address(es) for the past two years.
  • A copy of an official, government-issued identification card (e.g., state ID card, driver’s license, etc.).
  • A copy of a financial statement or a bill (e.g., electricity, water, another utility bill, a bank statement, etc.).
  • A detailed outline of each item on your report that you believe is inaccurate. This part is particularly important – it needs to be clear and easy to understand. You must also include the account number and explain why you think the information is incorrect.

Initiating a Dispute Online

Generally, it’s easier and quicker to dispute a charge-off online.

Here’s what you need to do:

  • Go to Experian’s online dispute center.
  • Click “Start a new dispute online”
  • Follow the steps on-screen to sign in and dispute the charge-off.
  • To see an update on your dispute, you’ll need to sign in to your Experian

Initiating a Dispute through TransUnion

If you want to remove a charge-off from your TransUnion credit report, you’ll need to follow similar steps to the above.

TransUnion has an online dispute page where you can initiate the process quickly and efficiently.

Here’s what you need to do:

  1. Go to the TransUnion online dispute page.
  2. Click “Start dispute” near the top of the page.
  3. Follow the on-screen instructions to complete the dispute.

You will need to open a new TransUnion account (which is free to do). You’ll then be able to check the status of your dispute by logging in to your account.

If TransUnion validates your dispute, they will update the debt appropriately without you needing to do anything else. If the credit bureau does not validate your dispute, you can add a 100-word statement explaining the debt.

Other Ways to Remove Charge-Offs

Removing the charge-off won’t be as easy if it isn’t an error. However, there are several things you can do.

1. Negotiate

If the creditor (e.g., the credit card company) hasn’t sold your outstanding debt to a debt collection agency, you can negotiate a payment arrangement. This arrangement could be a settlement or payment plan that allows you to pay some of the outstanding debt (but less than the total amount).

The key when negotiating is to help the creditor understand if any special circumstances made you unable to make on-time payments. These could be a one-time major event like a death in the family or a medical crisis.

Communicating this information could be particularly effective if your payments were on-time until then. The creditor can set up a payment plan where you agree to pay back a certain amount within a set time frame.

You could negotiate the minimum payments you can make and reduce your debt without having to pay all of it back in full at once. If the creditor agrees to a payment plan, make sure you get a written confirmation.

If you agree on a settlement, it will still appear on your report. It isn’t as harmful as a charge-off – but it remains a derogatory entry that future lenders must consider.

If the creditor has already sold your debt, negotiating with them will be more difficult. The original creditor won’t have much incentive to collaborate with you because the debt is another company’s problem.

In this case, it’s best to focus on resolving the collection account.

2. Send a Pay-for-Delete Letter

If the charge-off is legitimate, try sending the creditor a pay-for-delete letter.

Generally, charge-offs are also bad news for creditors. When they sell your outstanding debt to a collection agency, they only get pennies for every dollar.

That’s why pay-for-delete may be an attractive option. In this letter, you’re offering creditors a deal: you will pay some of the debt if the creditor deletes the record of your charge-off.

There’s no guarantee the creditor will agree. They’re not obligated to accept and delete the record, but it’s worth trying.

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When writing a pay-for-delete letter, keep it brief and clear. There are good templates online. The key is to only offer to pay what you can afford – there’s no point in overpromising or paying more than you can afford.

If the creditor accepts the pay-for-delete arrangement, get their commitment confirmed in writing.

3. Get Help from a Credit Repair Company.

Though this may seem counterintuitive, hiring a credit repair company is an option for some.

Credit repair companies handle the whole process of dealing with an unpaid charge-off for you. They send dispute and pay-for-delete letters and negotiate with creditors to get the best possible deal and remove the negative items.

What’s the catch? You have to pay them, of course. So, on top of being in credit card debt, you’re spending more money on getting the charge-off removed.

If you only have a few negative records, then dealing with the creditor yourself is better. Sending the letters yourself is relatively simple and free. Why pay a credit repair company when you could use the money to pay off the outstanding debt?

However, it might be best to leave it to the pros if you don’t have the time to deal with the creditor or have bad credit with a highly complicated credit history and several negative accounts.

Make sure you know how much you’ll pay them and choose a legitimate, highly-rated company.

Be Wary of Shady Credit Repair Companies.

The credit repair industry has a shady reputation. While there are some reliable, legitimate businesses, you may also come across non-reputable companies.

These companies may claim that they can get your legitimate charged-off accounts removed. Be skeptical about such promises – this strategy isn’t worth it.

Even if you successfully remove a legitimate item, likely, it won’t be gone forever. Creditors may report it in the future, so it’s likely to reappear.

4. Try Writing a Goodwill Letter

If your debt is overwhelming, consider writing a goodwill letter to your creditor. Some people fall behind on payments due to difficult circumstances (e.g., losing a job, a divorce, or a death in the family).

If this has happened to you, it might be worth writing to your creditors and explaining the situation. Include any evidence you may have to help your case.

Many creditors will agree to work with you if you’ve had good payment history up until the event or incident.

Frequently Asked Questions

Can my account be charged-off if I’m making payments?

Yes, the creditor can still charge off your account if you make payments below the minimum or file for bankruptcy.

When I apply for a new credit card, will a credit card company care about charged-off accounts?

Lenders need to know that you’re reliable and will be able to make payments on time – whether it’s a new bank account, an auto loan, or a new credit card. A charge-off shows that you’ve missed some payments in the past. Credit card issuers are likely to be more reluctant to work with you.

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How to Remove a Charge-Off Without Paying [2 Steps to Follow]

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Charge-offs substantially harm your credit and make it challenging to get approved for loans, credit cards, and more. Even if you pay a charge off, it can stay on your credit report for many years.

Fortunately, it’s possible to get an illegitimate charge-off removed from reports without paying. It’s even possible to get a legitimate charge off removed without paying the total amount.

Please keep reading to learn what precisely a charge off is, how it affects your credit, ways to get a charge off removed, how to rebuild your credit after a charge off, and more.

What is a Charge-Off?

woman looking concerned

When you’ve stopped paying off debt for a significant amount of time, typically six months or more, the creditor will create a declaration that you aren’t likely to pay off your debt. This declaration is called a charge-off.

However, you’re still responsible for that debt. Either the credit issuer will continue asking for payments, or it will hire a collection agency.

Be warned: people calling as a debt collection agency is a popular phone call scam. If you receive these calls and don’t think you have charge-offs, be wary about providing any personal information over the phone.

According to the Fair Debt Collection Practices Act, debt collectors can’t try to communicate with you at any unusual time (typically before 8:00 a.m. or after 9:00 p.m. in your time zone).

If you receive a call from a debt collector outside that time frame, that is a sign it may be a scam and violates the Fair Debt Collection Practices Act.

Other lenders likely won’t work with you when you have a charge-off because they don’t trust you will repay the debt.

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You may face severe repercussions for having charge-offs. Therefore, you should attempt to make your minimum payments or more to credit card issuers or other lenders.

Does a Charged-Off Account Show on Your Credit Report?

couple reviewing financial documents together

Yes, a charged-off account does show up on your credit report. As soon as you have delinquent payments, your credit card issuer will change the information reported about you on your credit report.

Your account with them will go from the “Account in Good Standing” portion of your credit report to the “Negative Accounts” or “Negative Items” section.

After around six months of missed payments, the creditor will report it as a charge-off to the main three credit bureaus. This derogatory mark on your credit report can affect your credit for up to seven years from your first delinquent payment.

A charge-off significantly harms your credit score because having an on-time payment history counts as the most significant factor for credit scores. If your debt goes to a third-party debt collector, it can negatively affect your credit even more.

Having a low credit score makes it challenging to qualify for a mortgage, auto loan, the best credit cards, and more. When applying for any of these loans, the loan issuer checks with credit reporting agencies and sees the derogatory mark.

How to Remove a Charge-Off Without Paying

couple reviewing information on computer

When a charge-off is legitimate, it’s doubtful you’ll be able to get the charge off removed without paying off your debt at least partially. However, if you believe the charge-off is in error or even that one detail may be inaccurate, you might be able to get it removed without paying.

In the event of an error, initiate a dispute investigation with the credit reporting agency, and notify the creditor you’ve disputed the charge-off. You’ll need evidence, such as proof of payments.

According to the Fair Credit Reporting Act, if you see anything incorrect on your credit report, you have the right to dispute it via a letter. Doing this is often referred to as the “609 loophole.”

If the charge off is legitimate, get a current copy of your credit report. Each of the three major credit bureaus (Equifax, TransUnion, and Experian) must provide you with a yearly free credit report. You can order your report at

Look for the charge-off entry and make sure everything is 100% accurate. Suppose you see anything wrong, such as the account number, borrower names, balance, payment history, etc. In that case, you can dispute the entire charge-off entry with any credit bureau.

If everything looks accurate, consider the following two options for how you might be able to pay the debt just partially rather than in full.

1. Negotiate with the Creditor

Negotiating with the creditor usually still involves paying some of the debt. In a “pay for delete” arrangement, you pay them to remove the charge-off, and the Fair Credit Reporting Act states that this is legal.

A paid charge-off eliminates your leverage, so arrange your pay for delete before making payment arrangements. If you don’t have enough to pay back your debt entirely, offer partial payment and have the charge off removed.

Credit card issuers would rather receive some money than none. Get your agreement in writing, and don’t give the debt collector access to a bank account.

2. Consult with a Credit Repair Company – Buyer Beware

People with charge-offs sometimes choose to speak with a credit repair company. These companies charge a fee.

However, some work on your behalf to challenge negative items creditors may have placed on your credit reports with the three credit bureaus.

Services like Credit Saint perform a full analysis of your credit history, challenges the damage you disagree with and sets you up with a plan to build credit.

The service comes highly-regarded by other users, showing 4.9 out of 5 stars with almost 170 reviews on

Consider this service if you need assistance with repairing your credit. Set up a consultation to learn more about Credit Saint and whether it can help with your charge-offs.

  • Credit Saint performs a full analysis of your credit history, challenges the damage you disagree with, and sets you up with a plan to build positive credit.
  • The credit bureaus then investigate the challenges received and press creditors to defend the items on your report.
  • Credit Saints implements a credit building plan before the credit bureaus release new reports showing any changes made.
  • All Credit Saint programs come with a 90-day money back guarantee. If you don’t see questionable negative items removed during this period, you will get a full refund.

How to Sell a Car When You Still Have a Loan

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, commissioned or otherwise endorsed by any of our network partners.

If you’re still making payments on your car but are ready to sell it, you may be wondering how to sell a car with a loan. In short, you have to pay off the loan so the lender will release the title and ownership can be transferred to the new owner, whether that’s a private buyer or a dealer taking the car as a trade-in. In any case, negotiation is critical to getting the best price for your used car so you can at least come close to paying off the loan.

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In this article, we’ll cover…

  • Steps to selling a car with a loan
  • Selling with positive equity
  • Selling with negative equity
  • What to do when the bank wants the payoff before you sell your vehicle
  • How to sell a car with a loan: FAQ

Steps to selling a car with a loan

Whether you’re selling the car to a private party, trading it in or selling to a dealer outright, there are some things you need to know and a few steps you should follow when selling a car that has a loan.

1. Determine what your car is worth

First, determine how much your car is worth in the market today using a vehicle valuation site such as Kelley Blue Book or Edmunds. Other used-car buyers, including Carvana and CarMax, will also give you a valuation for your vehicle. The sites will ask for basic information about your car: the year, make, model, overall condition and the ZIP code in which you reside. Some sites will also ask for the license plate or vehicle identification number (VIN) in order to generate a value. Be honest when you assess the condition. You may have come to overlook your car’s flaws, like a rip in the seat or a small dent in the fender, but the buyer will see those problems and may value the car lower than you expect.

The way you plan to sell the car will influence how much money you make on the sale. For instance, you’re likely to get more for your car if you sell it to a private party than if you trade it in to a dealer.

2. Determine your payoff amount

Ask your lender for a payoff amount, which is likely to be different from your current loan balance. The payoff amount includes the balance of the loan, interest up to a specific date and any fees. Payoff amounts are typically valid for 10 days, depending on the lender. You should be able to get the payoff information through your lender’s website or by calling to request it. Be sure to review the Truth in Lending Act disclosure on your loan contract or ask your lender if your auto loan has a prepayment penalty before you pay off the loan.

3. Understand your equity

Once you know the value of your car and the payoff amount, you can understand your equity in the car. It’s the difference between the value of the car and the payoff amount. There are two options: positive or negative equity.

  • Positive equity: This means your car is worth more than the payoff amount. If your car is valued at $15,000 and the loan balance is $13,000, you have $2,000 in positive equity.
  • Negative equity: This means your car is worth less than the payoff amount. It’s also often called being upside-down or underwater on your car. If you owe $15,000 on the loan but the car is only valued at $13,000, you’ll have to come up with an additional $2,000 to pay off the loan.

4. Discuss the sale with your lender

Before listing your car for sale, it’s smart to consult with your lender. You’ll want to understand the equity position of your car and their payoff requirements to complete the sale.

Selling with positive equity

Selling a car with positive equity is a good place to be. It means the sales price or trade-in value is more than what you owe on the loan. So, you could walk away with some money in your pocket, or you could apply the positive equity to a new car loan.

When you sell a car with a loan on it, you will have to use the proceeds to pay off your loan and transfer the title. If you buy through a dealer, the dealer should take care of this process for you. If you sell directly to a private party, you will have to pay the loan balance yourself.

There are a few things you can do to make the process easier. For example, if you have good credit, you could use a personal loan to pay off the car loan before the sale so you have the title in hand. Then, you could take the proceeds and pay off the personal loan. Selling your car is much simpler when the auto lender isn’t involved and when you have a clear title. This process is also a way to potentially remove a cosigner from the auto loan to simplify the transaction.

Depending on the state where the car is registered, you will have to work with the Department of Motor Vehicles (or appropriate state titling agency) and the lender to transfer the title to the new owner. (If you plan to do a private sale, be sure to create a bill of sale and release of liability.)

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Selling with negative equity

The process for selling a car when you’re underwater or upside-down is more complicated. You will not only have to pay the lender all the proceeds from the sale, but then you’ll have to pay more money to cover the negative equity amount. There are several options for selling the car and paying the loan debt in full when you’re dealing with negative equity.

  • Cover the difference out of pocket. Depending on the amount of negative equity, you may be able to pay the difference from your savings or another source. If you must tap your savings, don’t deplete your emergency funds or forget other savings goals.
  • Discuss options with your lender. Talk to your auto loan lender or another bank or credit union about your options. Your current lender may have refinancing options that could help.
  • Wait to sell. Continue making payments on the vehicle until you have positive equity. If possible, keep the mileage low and take good care of the vehicle so the value will get a boost for being in good or excellent condition. Refinancing to a lower interest rate can help shorten the time it takes to build equity. You could make extra car payments or make a larger payment each month to build equity faster.
  • Sell your car privately. You may be able to sell it directly to a buyer for more money than you’d get from a dealer. However, you and the buyer will have to handle all the administrative steps to transfer the title and registration and pay the loan off.
  • Roll the negative equity into your next car loan. If you must get a new vehicle, you could trade in your old car and take out a new auto loan that includes the amount of the negative equity. Make sure you fully understand what’s happening because this approach will make you immediately underwater on the new loan. The monthly payment on the new car will be higher than it would be otherwise. If you want to get rid of that car before the loan is paid off, you could find yourself rolling over negative equity into the next loan as well. That’s a costly habit you should avoid if possible.

TIP: If you need another car loan, check your credit score and get preapproved for an auto loan before you go to the dealership so the dealer won’t try to inflate your APR.

What to do when the bank wants the payoff before you sell your vehicle

The lender will require the full payoff amount before releasing the title to the buyer. If you have positive equity, the lender will send a payment for the difference. If you have negative equity, you’ll have to pay the lender the rest of the payoff amount before the new buyer will get the title.

When the bank wants the payoff before you sell the vehicle, you have a few options.

Refinance your current loan

You could lower the interest rate or extend the loan term to make the payments easier to manage. Refinancing to a lower APR could help you build equity faster so you could move into a positive equity standing or at least have less negative equity.

Get a personal loan

You can get a personal loan to pay off the auto lender so you have possession of the title. Then you can sell the car and use the proceeds to pay off the personal loan. If you don’t pay off the full balance, you will have to make payments on the personal loan until it’s paid off. Keep in mind there will be fees associated with getting the personal loan, so compare the cost of the fees with your other financing options.

Use your savings. Pay the remaining loan balance with your savings. Of course, you’ll have to have enough cash on hand to pay the difference.

How to sell a car with a loan: FAQ

Can you sell a car with a loan?

Yes, you can sell a car with a loan, but the loan will have to be paid off before you can transfer the title to the new owner.

How do I transfer my car’s title?

You must work with the lender and the Department of Motor Vehicles (or your state’s car titling agency) to transfer the title when the loan is paid off. A dealer will handle the process for a trade-in, but in a private sale, the seller and buyer will handle the paperwork.

Will selling a car with a loan hurt my credit?

Paying off your car loan early could lower your credit score to some extent, but the drop is only temporary.

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