The information contained in your credit report dictates your credit score, which is a determinant of your credit-worthiness. The higher your credit score, the more likely it is that you’ll be able to secure loans or lines of credit with low-interest rates and other favorable terms. Reports of missed payments, delinquent accounts, and “charged-off” debt are negative marks on your credit report and can lower your credit score.
What Does it Mean to Have a “Charge-Off” Debt?
A “charge-off” means the creditor determined that the debt owed by the consumer is unlikely to be collected, wrote the account off of as a loss, and closed the account to future charges.
- Federal regulations require revolving creditors (credit cards) to charge-off an account after 180 days of delinquency.
- After a charge-off, the account may continue to report the past due amount and the balance owed.
- The charged-off account will remain on your credit report for seven years from the original delinquency date, the date of the first missed payment that led to the charge-off.
- A charged-off debt does not just go away―the debt is still owed.
After a creditor has charged-off an account, they may transfer or sell the debt to a collection agency. When this happens the collection agency will also report the account and the balance owed on your credit report.
The collection agency will then attempt to collect on the debt. Even if they bought the debt for pennies on the dollar, they will demand payment for the full amount. When dealing with debt collectors: know your rights. Third party debt collectors must adhere to the federal Fair Debt Collection Practices Act. If they do not, they are violating your rights.
If you have charge-off accounts and other delinquent debts, it is time to explore your various options to get out of debt. The sooner you face your debt problems head-on, the sooner you can get out of debt and enjoy the financial fresh start you deserve.
Exploring How Bankruptcy Erases Debt
Here at the Law Office of Barbara B. Braziel, we will make sure you understand the benefits of bankruptcy and how filing will effect you and your family. We file hundreds of Chapter 7 and 13 bankruptcy cases every year. But our clients are never just a number. You will not be left in the hands of a paralegal. You will have access to your attorney throughout your bankruptcy case.
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We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.