What is a “Charge Off”?
“Charge off” means that the credit grantor wrote your account off of their receivables as a loss because your initial loan was an asset to the creditor. When an account reports a status of “charge off,” it means the account is closed to future use, although the debt is still owed. The credit grantor may continue to report the past due amount and the balance owed. If you pay the account, the status will reflect as a “paid charge-off. “The charged off account will remain on the credit report for seven years from the original delinquency date of the account, which is the date of the first missed payment that led to the charged-off status. When a creditor charges off a debt, they will first try to collect the debt themselves. If you aren’t able to work out a payment arrangement with them, they can do two things, hire a collection agency to collect for them or sell the debt to a collection agency. Most creditors sell their charged off accounts to a collection agency for a percentage of the account’s value. In that case, a new account will be reported from the collection agency that owns the debt. You can no longer pay the original lender, which is no longer associated with the account, but must deal with the collection agency. Again, if you pay the debt, the status will be updated to “paid collection.” Both the charged off account and the collection account will be deleted at the same time based on the original delinquency date of the debt. Once a debt is charged off, it will be tempting to not to pay it even if you have the money to do so. You may want to reconsider that thought. By paying the debt, you can change the status of the account to “Paid Charged Off.” That tells other future lenders that you make every effort to repay, even if it’s hard to do so. That status looks much better to lenders than a status of just “charged off” because the debt is no longer outstanding.
Here at Y2K Credit Solutions, we can negotiate with your creditors to settle the balance owed. Our goal is to negotiate a settlement between you and your creditor(s) that will save you as much as possible. Call in today for your free consultation and let your debt be a thing of the past!