Marine

Sooner or later you will hear a creditor representative threaten you with the dreaded "charge-off.". So what is a charge-off ? What are the consequences of this mysterious event? We will start with what a charge-off is NOT. Most banks will revoke charging privileges around 2-3 months before the deadline we're talking about here. What banks and bill collectors call a "charge-off" is the point at which the creditor writes off the account balance as a "bad debt.” They will certainly make continued attempts to collect it from you. They will punish you by placing a derogatory mark on your credit report. A "charge-off" is a serious negative mark. It is not the financial ruination that debt collectors would like to have you believe it is. Does the prospect of a charge-off mean you should panic if you have no way to pay the bill? Is it the end of the world if the account has already charged off?

Most of us are brainwashed by the banks and media on the subject of credit. Good credit is important. Committing to payments you really can't afford just to preserve your credit is like watering the lawn while your house is burning down.

Here are a few simple rules to follow when trying to avoid a charge-off that hasn't happened yet:
Most of us are brainwashed by the banks and media on the subject of credit. Good credit is important. Committing to payments you really can't afford just to preserve your credit is like watering the lawn while your house is burning down.
Here are a few simple rules to follow when trying to avoid a charge-off that hasn't happened yet:
Don’t be intimidated or threatened by pre-charge-off collection tactics.
Don't commit to this payment (or series of payments) unless you're sure you can follow through. Negotiate a lump-sum settlement at 50% or less if you have the resources. What should you do if you simply don't have the money to rescue the account from charge-off.

The sky won't fall on your head just because you had a charge-off. You still have an opportunity to resolve the matter by dealing with the original creditor or the collection agency assigned to the account.

Negotiate a lump-sum settlement with the creditor or collection agency. (Most creditors will not agree to this.Be sure that they will update your credit report to show that the matter has been resolved and the account has been satisfied.)
If you can't work out a deal with the collection agency assigned to your account. It will either be assigned or sold to an outfit that you can deal with to get the matter cleared up. A charge-off is not the end of the world.