You Have Something in Charge-Off Status?
I'm In Debt
- Posted:
1/28/2008
Sometimes, life gets the best of us. A credit card or loan may not be paid on time, for a certain number of days and BAM! You find yourself with an account in "charge-off" on your credit report. You'll experience a hefty decrease in your actual credit score, but the real problem is that whenever a new creditor views your report for credit worthiness, a red flag goes up because you've got an account that charged off- in other words, wasn't paid.
Who wants to lend you money if you defaulted on an account you already had?
What employer wants to hire someone who doesn't have enough responsibility to pay their bills on time?
The problem is- there are numerous reasons why accounts end up in charge-off status- most people don't willingly let their accounts go unpaid. The credit report won't show any reasons though, and you are rarely given a chance to explain it. Don't you wish there was a "debt relief" pill that could just fix it all for you?
What you don't want to do, is allow the creditor to push you around or threaten you once the account is charged off. You may receive letters and/or phone calls with threats to sue you if you don't pay the entire balance of the account in it's entirety within a certain amount of time.
You do still owe the money- don't think that because it "charged-off" that you no longer have to pay it, because you probably will. Unless you declare bankruptcy, you still have to pay for it. And if it's a school loan, even bankruptcy can't bail you out.
What you should do though, is request an account history. You should be able to see how much you owe and how those charges were determined. I say this because it's possible there were additional fees and interest added that really don't belong there as the account was charged off. Always better to investigate it then simply pay the amount requested.
Ask what your credit report will display, after you pay the account. Will it be "paid as agreed"? Or some other notation that may still leave a negative mark on your report? Work on negotiating the best notation you can have for your credit report, or perhaps they can remove it completely once paid.
If you're not able to pay the entire amount that's owed, most creditors that have put an account into charge-off will be willing to accept less than the entire amount owed. Keep in mind if you settle, your credit report will probably show "paid-settled" (still better than an account in charge-off) and that whatever the difference is between what you owed and what you settled for is the amount you'll have to include as income on that year's tax return.
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