Prevent charge-offs in any way possible. They can be a wrecking ball to your credit.

Many people assume that a “charge-off” means they will no longer have to pay the balance that they owed.

They might assume it’s a good thing, and think that since they are no longer trying to collect, you’re free from making any further payments. Unfortunately, that’s not the case.

A charge-off is simply a creditor declaring the account as a loss.

Basically, they are declaring that the debt is not likely to be collected, and they no longer consider it as an asset. These companies lose profits by doing so.

However, you are still responsible for paying it off. Your account will normally be charged within about 6 months. You can, in some situations, negotiate with the creditor to have it removed from your credit report, only after it is paid in full.

If not, you will have to wait a three to seven year period for it to be removed.  Normally, this is about the time you will begin receiving calls and letters from the collectors demanding they get the money that you owe them.

If the amount of the charge-off is high, then it may also be turned over to an attorney. They will then begin trying to collect the debt from you themselves and if that fails, you could possibly be taken to court.

Charge-offs can have an extremely negative effect on your credit, but there are ways to prevent having charge-offs on your credit report.

1)Make the minimum payment to your account each month.

2)Do your very best to not miss a monthly payment. (every time you miss a payment, it’s one step closer to a charge-off)

3)Get caught up on past due accounts. (especially ones that are near six months past due)

4)Inform the creditor of your situation before it get’s any further out of hand.

When it comes to charge-offs, it’s better just to pay them and get it out of the way if at all possible. In some cases, they might even agree to allow you to pay a percentage of the original debt in order to settle it. Write them a letter stating your offer.

Make sure you tell them that if they agree to this , they must send you a written letter informing you that your debt will be documented as “paid in full.” That way they will be unable to collect from you any further.

This also applies if you have paid the amount in full. Unfortunately there are some debt collectors that will still insist on payments even after you have paid them all you owed.