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Can a charge-off be removed due to a checking account overdraft

Checking account overdrafts can lead to a charge-off on credit reports. But a pay for delete offer can remove a charge-off if the bank agrees.

QUESTION: I found an old check from 2012 in a purse of mine back on October 30, 2017. The check was for $282 for maternity benefits from my previous job. Being a stay at home mom who is no longer working I was so excited to find this lost gem. I went to the atm and deposited it that day, not knowing if the funds would be made available since it was an older check. The money was immediately deposited to my account. Over the course of the next week I spent that money.

2 weeks after the deposit I get a notification that my bank account is negative and when I logon to see why I see the check has been reversed. I reach out to my bank for a reason and they say it just says “refer to maker”.

I contact my previous employer and try to get it touch with Conexis, the initial issuer of the check, to have a new check written since I’m thinking the funds were reversed since it was an outdated check. This is all happening around the holidays so I was unable to get an immediate response. During this time my bank, Alliant Credit Union, who I’ve been a member with for 36 years, literally since I was born, has communication from me that I am trying to get to the bottom of the issue with the check.

Regardless, they close my account on Dec 28th. At the end of Dec. I get a response from my previous employer that Conexis claims they reissued that check back in 2012 as a different check # for the same amount and that it was cashed in June of 2012. I try to login to Alliant to view my statements from June of 2012 to verify that this check was in fact cashed (since Alliant is my only bank) and Am not granted access to my statements since my account is now closed.

So I reach out to them for my June statements. They provide them to me and there is no evidence of said check being cashed. I spend multiple hours calling different Alliant representatives and explaining the situation and asking for them to do a simple search of my account for any evidence of check #6745 ever being cashed. I am told by one rep that accounting will research and get back to me. They did not. I am told by another rep that if I want them to research it will be $25 an hour.

I tell them I am happy to research myself but I cannot access all of my statements since my account is closed. I am given the run around and completely brushed off. Meanwhile my account has been sent to Conserve for collections. As I am disputing the debt with Conserve and explaining that Alliant will not search and verify that this check was ever cashed Alliant lists my account as charged off on my credit report.

This caused my excellent credit which I’ve worked so hard to maintain to drop to fair. I am so upset. I’ve reached out to Conserve and Alliant and said even though I don’t feel I should have to pay the debt that I don’t want to waste any more of my life on this issue and I don’t want my credit to suffer. I told Alliant I am willing to pay if and only if they remove the charge off from my credit. They will not. They said they will only list it as charged off paid in full.

Conserve says they cannot remove the charge off. I’m just so shocked that after being a member for 36 years, my bank, knowing I’m trying to get to the bottom of this mystery check issues would not only close my account but file a charge off before I even get a decision from Conserve regarding my dispute. My account was closed Dec 28th 2017 and the charge off was listed Feb 10th, 2018.

What can I do to repair my credit? Should I dispute directly with the credit bureaus? I just feel like I wasn’t treated fairly. As I told them, I am an honest person who will be happy to pay any valid debt that I owe. I just wanted my bank to prove to me that the check in question was in fact cashed. They passed the buck to the maker of the check so I was just bounced back and forth with no solid confirmation. I would love any feedback and advise. Thanks so much!

Conserve is the collection agency; they cannot remove the charge off. Only Alliant can agree to remove the charge-off. When an account is charged-off by the original creditor, it can remain on your credit report for 7 years from the original delinquency date leading up to the charge off.

Because Alliant transferred or sold the account to Conserve, the original account should have been updated to show transferred/closed, and will no longer show a balance owed because the debt is now owed to the collection agency. However, your credit report will still show the history of the account, including the amount that was charged-off.
Conserve will report the current balance owed which may be higher on the collection account due to interest and fees added by the collection agency.

Conserve can report the date the collection agency acquired the account as the open date. Both the original Alliant charge-off account and the Conserve collection account will be removed from your credit reports once the credit reporting time period has passed which is 7 years from the original delinquency date leading up to the charge off.

You can always dispute an error or inaccurate information on your credit reports. However, the bank can simply verify the charge-off as accurate. Clearly they are unwilling to research the prior alleged transaction because the two issues are unrelated in their view.

If you think the situation can be resolved by proving there was no 2012 check cashed by you, then paying the $25 hour to research the matter may be worth it.

Here are two options as I see it:

1. Send a pay for delete offer to upper management or the board of directors at the credit union. The representatives you’ve dealt with more than likely don’t have the authority to negotiate a pay for delete transaction. A pay for delete will get rid of the Alliant charge-off as well as the Conserve collection account. I think it's your best option.

2. In lieu of getting the credit union to research the 2012 transaction, make a complaint with the credit union’s regulatory agency, the NCUA. File a credit union complaint online. Once you get them involved, they may able to get the information you are seeking at no cost to you. If you go this route make sure you let them know the resolution would be deletion of the charge-off from your credit reports.

The best of luck to you.

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