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Advice Team Responses
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Dealing With Debt: Charged Off Accounts |
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I am currently $12,000 in debt. I have been making payments for years. I figured out if I were to try to pay off my charged off accounts it would take almost 10 years. Shoud I try to pay them off or just wait another few years until the delinquencies start to come off my credit report? -Jim |
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Jim,
From what you have told me, I think you should reconsider your idea to wait it out. A "few years" is a very long time and even if the items do come off of your report, you will still owe the money. In addition, your creditors may choose to sue you for payment. If a creditor was successful in obtaining a judgment, it could lead to further collection efforts such as wage garnishment.
A better solution might be to try and work out a repayment program with your creditors. If you would like assistance with this effort, please call a trained credit counselor at 800-762-2271.
Best of luck to you,
The Advice Team |
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I have recently heard the term charge off. What is it? How does it affect the lender, as well as the borrower? Please let me know. Thanks. -Jan |
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Jan,
A charge off occurs when the lender determines that a debt is uncollectable. At this time, the lender can consider the amount a loss for accounting purposes.
Even though an account is charged off, the borrower still owes the money. In addition, the charge off will appear on the borrower’s report for up to seven years. A paid charge off always reflects better than an unpaid charge off.
Hope this helps,
The Advice Team |
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If a creditor has "charged off" a credit card account why is a collection agency calling looking for payment? Also, shouldn't the interest then be stopped if the account has been charged off? Thanks. -Tina |
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Dear Tina,
I realize that credit terminology can sometimes be confusing. The term "charge off" only means that the creditor has internally reclassified your account from a profitable account to an unprofitable one.
If the debt hasn’t been paid, it is still owed. The amount of interest they can charge should be outlined in your original contract with the creditor. If it is not outlined in your contract, it is dictated by state law.
I recommend you make arrangements to pay the account. A paid charge off always reflects more positively than an unpaid charge off. If you need help, MMI credit counselors are standing by at 800-762-2271.
The Advice Team |
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