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Credit Card Charge-off - How Bad Is It?
By admin | March 13, 2008
So, you’re facing the dreaded “charge-off” that your creditor has been threatening for months – how bad is it really? Well, to be perfectly honest, if your account is already delinquent, and nearly to the point of being charged off, your credit score has already been compromised, therefore, don’t be intimidated by your creditor stating that a charge-off is going to ruin your credit; it’s already taken a “hit.” Rather, take the necessary steps to remedy the situation if at all possible.
You see, many people assume that a charge-off is no longer a debt that is owed, and the account balance has been written off by their creditor. Not true. Once an account is charged off it is only “written off” as a bad debt, but the entire balance is still owed; the account is simply reflected differently and is no longer considered to be an account which generates income for the creditor. But make no mistake; you will still owe the entire balance.
If you’d like to avoid an account from charging off, contact your creditor to inquire as to what the minimum payment would be to hold the account at its current status. Oftentimes creditors charge a certain percentage of the debt or minimum monthly payment to work with debtors in an effort to avoid a charge-off until the account can be either paid off or settled. Whatever you do, however, please don’t commit to a payment that you simply cannot make. I understand that creditors attempt to coerce debtors into making a payment or post-dating a check, but this will do you absolutely no good if you cannot follow through with your promise.
Rather, let the account charge off and contact your creditor at a later date, perhaps when you’re in a stronger position to negotiate a lump-sum settlement through debt settlement.
This will allow you to pay the account in full, with no further balance owed – possibly even through installments. Of course, this can be discussed when you contact your creditor.
In summary, charged off accounts aren’t the end of your world; eventually your financial situation can be worked out with your creditors. If you’re facing a charge-off and would like additional information regarding your options, feel free to visit www.DonaldsonWilliams.com. Whatever your current situation may be, there is an end in sight and you will once again be free from debt.
Marie Megge is a consultant in the credit services industry. Over the past several years she has assisted many individuals in resolving their debt-related matters. For more information regarding credit and debt visit http://www.donaldsonwilliams.com
Tags: bank, Credit card charge-off, credit card debt, debt, Debt Consolidation, debt help, debt settlement
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