What Is A Charged Off Account? Many people look at their annual free credit report and see notations such as “charge off” or “account has been charged off” and wonder what exactly that means. Typically when you stop making payments on an account it will go 30 days late, 60 days late, 90 days late and then 120 days late. After that point many credit card companies will close the account and mark it as a charge off. It is written off as bad debt and then it is set through the collection process. Some credit card companies will handle that process internally and send settlement offers in hopes that you will settle the debt at a smaller amount. If these notices are ignored it is quite possible that they will turn the account over to an Attorney or Law Office and they may pursue a Judgment against you for the full amount plus court and legal fees. This does double damage to your credit report as it will show the charged off account as well as a Judgment. You want to try to avoid this and limit the damage as much as possible. Many credit card companies will write off the account as a loss and bundle up all of their bad debt and sell it for pennies on the dollar to a collection company. According to the FDCPA these collection companies must send you a written notice of the alleged debt giving you 30 days to respond before they may report it to the credit bureaus. You have to know how to properly respond to their notice, and that is where credit repair companies come into the picture. They have a system to handle the communication process with debt collectors, which has your consumer rights in mind. Your credit can take a double hit from this as well as the original charge off will be reported as well as the collection account. If you fail to respond to the collection company in a timely manner then they will begin to call you nonstop and flood your mailbox with offers to pay a smaller amount to settle the account. Some of these companies can be quite annoying and will often lie to the consumer in an attempt to collect the money. There is a fine line when it comes to dealing with collection companies, as a large percentage of them operate illegally and some are not even properly licensed to collect in every state. It is suggested that you consult with a successful credit repair organization and allow them to handle the process. Obviously you want to avoid having an account charge off, but sometimes it cannot be avoided. Knowing how the process typically works will help you work on a plan to restore the situation. If you do not take action and try to correct the situation the negative accounts will stay on your credit reports for a period of at least 7 years. Doing nothing will not help at all, so it is best to be proactive in your attempt to clean up the charge off. Sometimes if your financial situation changes and you have the money to pay off the account the original creditor will agree to delete the charge off from your credit report in exchange for payment in full. If you never ask, you will never know. This would require paying the account in full, and for most people put into this situation it is just not possible. This information should help you to know what to expect if you happen to allow an account to be charged off. If you are
prepared then you can deal with the situation properly. Being aware of your consumer rights is crucial and for more information regarding that you can contact a reputable credit repair company. They typically will review your situation at no cost and let you know if they will be able to help you. There is help available to those who have suffered the effects of a charge off, beyond waiting 7 years for it to fall off of your credit reports.