Bad debts.

QA I am starting the process of clearing a couple of charge-offs from my credit report, and I have drafted a letter I would like to send to my creditors stating that I will pay them a lump sum if they remove the negative listing. I was wondering if there is anyone at BLACK ENTERPRISE [who] can offer advice on this issue.

T. Brown

Milwaukee

First things first, It takes at least seven years for a charge-off to be removed from your credit report. Typically, when a payment on an account is more than 180 days past due, creditors write off the account as a bad debt--or a charge-off.

Before you begin a letter-writing campaign, call the creditor (or in your case, it may be a third-party debt collection agency) to find out exactly how much is owed. Keep in mind this is a good time to negotiate for a settlement amount. Many creditors are amenable to making a deal for less than the original amount owed. If you decide to pay the debt in full, make sure your credit profile reflects "paid in full." If you settle, the account will most likely be reported as "settled charge-off." Generally, settled amounts must be reported as "other income" when filing taxes. Whether you pay in full or settle, get everything in writing before any payments begin.

Once you receive a letter of confirmation, stick to the terms of the agreement By taking responsibility for the debt, it shows creditors that you're serious about creating a positive credit profile. For more information on keeping your credit clean, read The Guerrilla Guide to Credit Repair by Todd Bierman (St. Martin's Press; $10.95).

Mail your consumer empowerment questions to Ask Your Advocate, BLACK ENTERPRISE, 130 Fifth Ave., New York, NY 10011 or send an e-mail to [e-mail].