Understanding Credit Card Charge-Offs

By Mike Watson www.CreditRepairMike.com San Diego Credit Repair

Credit card issuers won’t wait forever for you to catch up on your credit card payments. After six months of late payments, your credit card issuer will likely charge-off the account. Many people assume a charge-off means the credit card balance has been cancelled, but that’s not true. Instead, a “charge-off” is an accounting term that simply means the charged-off amount has been written off as a loss in the credit card company’s books. You still owe a charged-off balance and a credit card issuer can still come after you for payment. Simply walking away from your debt just isn’t an option.

Charge-offs are listed on your credit report Charged-off accounts are listed on your credit report. Typically, the account listing will have six-months of late payments beginning with 30-day, 60-day, 90-day, and 120-day late indicators. Finally, the notation for charge-off is added to your credit report. The Fair Credit Reporting Act (FCRA) allows a charge-off to stay on your credit report for seven years from the date it was charged off. In all, the negative information for the account is on your credit report for 7 years plus the 180 days it was late prior to being charged-off.

San Diego Credit Repair Charge-offs are sent to debt collections Since credit card issuers have written off the debt in their books, it often isn’t profitable for them to go after charged-offs accounts. Instead, these accounts are sold or assigned to third-party collection agencies whose sole purpose is to convince you to pay the debt. A debt collector might list the account on your credit report, call you, or send you letters to get you to pay. If your state allows it, a debt collector might go so far as to sue you. If the collector wins the lawsuit, the judge might give the collector permission to garnish your wages until the charge-off has been completely repaid.

Charge-offs hurt your financial progress Quite a few businesses look at your credit report to determine whether they should extend products or services to you. A charge-off can hinder your financial progress in a few different ways. It can keep you from: Getting a credit card or loan Buying a home or car Getting a job Getting a low insurance rate Having utilities or cell phone service established without paying a deposit Getting approved for an apartment Even after you’ve paid a charged-off account, it will continue to be listed on your credit report until the credit reporting time limit has expired (after seven years). If you talk to the creditor before sending payment, you may be able to negotiate removal of the negative entry from your credit report in exchange for payment. Some creditors will agree to this. Others will not. The best way to avoid dealing with a charge-off is to pay your credit card bill on time each month. If you can’t afford to make your minimum payment, call your creditor to make arrangements. In hardship situations, you may be able to temporarily lower your payment until your financial condition improves. Thanks For Reading Mike Watson http://www.creditrepairmike.com 619 734 9454 7349454@gmail.com Name(required) Email(required) Website Comment(required) Submit Δ