What Happens When A Credit Card Account Is Charged Off,

When you are sorely delinquent in paying your credit card debts, a creditor may decide to cut its losses and charge off the account. A charged-off account inevitably tanks your credit score and remains in your credit history for numerous years, which makes you less than appealing to prospective future lenders. But when a credit card account is charged off, you still remain liable for the debt.

Creditors may even take action against you in court and get a judgment against you. A creditor charges off your credit card account so it can report the uncollected debt as a financial loss for its own tax-filing purposes. The financial experts at the Credit website indicate that charge-offs usually occur after you haven't paid the debt in 180 days (six months).

Slow payments, on the other hand, show up in your credit history as 30, 60, 90, 120 and 150 days in arrears. If your debt has been charged off, the creditor has essentially given up hope that you will repay it. After a creditor charges off your credit card account, the debt may be sold to a collections agency, which often pursue repayment far more aggressively than the credit card issuer. This is the point at which you begin to receive phone calls and a flurry of notices in the mail.

But a creditor or collections agency may also opt to file suit against you in court to obtain a judgment against you. Depending on the laws in your state, the creditor may enforce the judgment by garnishing your paycheck or filing a lien against your personal property. Should You Pay the Debt, Bucci states that paying off charged-off credit card accounts is imperative.

If you have a charged-off debt that shows up in your credit history, Bucci advises contacting the original credit card issuer to determine if you can pay the account to the creditor directly. If not, you may need to work with a collections agency. Find out how much you owe and find out if the creditor or collections agency will work with you to negotiate a settled amount.

But never agree to pay more than you can afford to pay, Bucci warns. Lose Weight. Feel Great! AGE lbs. WEIGHT ft. What Happens When a Checking Account Is Garnished, Credit Cards for High-Risk People What Does Discharge Mean on Credit Card Debt, Prepaid Card Vs. Debit Card How to Settle My American Express Credit Card Account How Is Credit Card Fraud Investigated, What Is a High Credit Rating, 3 What Does Discharge Mean on Credit Card Debt, NewsArticle","headline":"What Happens When a Credit Card Account Is Charged Off,

Establish the sort of reason you can get the card back at the start. Everyone who wants a healthy financial cash flow needs to complete a budget. Because of easy access to credit cards budgets can be easily blown and easily forgotten. By doing a budget you will be able to identify areas of bad spending habits that can be removed from your budget plan. Certain expenses must be given priority such as living expenses and bills.

There tends to be an emotional attachment linked to the spending of actual cash whereas using a credit card for purchases gives the feeling of not spending at all. This is the reason that so many of us get into debt in the first place. Change to using cash instead.

By paying only the minimum monthly payment you are likely to only be covering the interest and none of the debit balance on your card. As interest on credit cards is high this is not a smart way to try to pay off your debt. If you have more than one card pay off the highest rated card first, always making sure that you pay the minimum on others. Once the one card debt is repaid cancel the card. Aim to only keep one card for your personal use.

The typical American consumer carries a fair burden of secured as well as unsecured consumer debt. The typical American consumer carries a fair burden of secured as well as unsecured consumer debt. These accounts usually refer to credit cards, personal loan, store credit accounts, and also car loans as well as home loans. It is not surprising that the recent economic downturn has seen an increase in loans which are progressively falling behind or are being defaulted on altogether.

Consumers may even attempt to rely on credit card accounts to withdraw cash and then turn around and use it to pay off other creditor accounts or simply contribute to their monthly variable expenses. The statute of limitations may be tricky for consumers to understand, especially since it is not a federal statute, but actually a state law.

As such, it varies anywhere from three to six years for unsecured loans, and up to 15 years for secured credit. Generally speaking, the statute of limitations starts on the date the last payment on an installment loan was made. Once the cut off time is reached, the creditor can no longer take legal action to recover any unpaid amounts due. On the flipside, if a consumer makes a payment in an effort to pay down some of the mounting debt she or he left behind, the statute of limitations starts all over again.

It is tempting to simply disregard the statute of limitations – once it is reached – and forget about the debt. What needs to be remembered, however, is the fact that this bad debt is still owed, even if it falls outside the statute of limitations. For the sake of credit repair, however, knowing about the various time limits is a worthwhile endeavor, especially since it aides the consumer in ascertaining the order of importance that their debts take.

Choosing to pay off those debts that are still well within the statute of limitations -- while saving those that have fallen outside this statute until last -- enables a consumer to get a fresh start with their credit profile. A skilled credit repair consumer advocacy group has the knowledge and ability to take a close look not only at the face value of the outstanding debts a consumer presents, but also suggest steps to clean up the credit profile. While this takes time, it is well worth the extra effort to get a fresh head start without necessarily having to file for bankruptcy or making financial promises that are hard to keep.

Work on those high interest credit cards. When you are overwhelmed with credit card debt and trying to decide which debts to eliminate first, always take a look at interest. If one card is 15% interest and another is 25%, think about how much money you are contributing to the principal and how much is just empty interest.