2007-03-24 19:32:09 · 8 answers · asked by lady26 5 in Business & Finance ➔ Credit
A charge off is when a company decides that they will not be able to collect the debt and are giving up. In a business way, its sorta like claiming a "tax exemption" for the company. Most Credit card companies have a charge of time of being 6 or more months delinquent. At this time it will affect your credit rating in a very bad way. Think of it as claiming bancruptcy with that one company. It will last on your report for at least 7 years.
2007-03-24 20:40:03 · answer #1 · answered by Robbyz3 2 · 1⤊ 0⤋
As the term charge-off includes the term charge, many people think term means cancellation of the account by the creditor. This means you cannot pay for anything with your credit card. But it not what the banks mean. According to banks and bill collectors, a "charge-off" is the point at which the creditor writes off the outstanding debt as a "bad debt." This normally occurs after 6 consecutive months of non-payment. From this point onwards, they do not consider your debt in their books as an asset. As you still owe the money, the creditor will continue their efforts to recover it from you. But the rules of accounting force the creditor to nullify your debt in their accounting books. To compensate for this loss, they penalize you by putting a negative remark on your credit report. A "charge-off" is a harmful negative mark, but it is not the financial disaster that your creditor would want you to believe.
Try to prevent charge-offs as much as you can. But do not get scared, if your account has been charged off. Most of the times, bill collectors give you an impression that charge-off is the worst that can happen to you and they put excessive force on the borrowers that most of them succumb and commit to making payments that they fail to honor.
2007-03-24 23:38:19 · answer #2 · answered by hendy h 2 · 1⤊ 0⤋
Something that has been charged off has been declared a loss by the creditor, they literally lost any money they lent you since you failed to pay it. It is a negative on your credit report and will remain on your report for up to 10 years and typically not less than 7 years. If you pay it off they might remove the mark from your report and/or change it to a positive mark (paid in full or $0 balance).
2007-03-24 19:45:44 · answer #3 · answered by Clark K 2 · 1⤊ 0⤋
Charge off is an ACCOUNTING term. It means the company that you owe money to no longer shows your debt as an asset on they balance sheet. This is completely unrelated to you obligation to pay. Reporting you default status to the credit bureau is as bad as anything an individual creditor can report.
2007-03-25 03:39:54 · answer #4 · answered by STEVEN F 7 · 0⤊ 0⤋
A charge off is sort of similar to a collection as far as having a negative impact on your score.
The difference between the two is this: A collection was sold to another agency for pennies on the dollar. The agency owns the debt and tries to collect on it.
A charge-off is when the original company writes the debt off of their books, stating that the money was collectible.
2007-03-25 01:47:19 · answer #5 · answered by YSIC 7 · 1⤊ 0⤋
I believe it's the equivilent of the credit card company saying you wouldn't pay your bill so they just gave up on you. It's not good.
2007-03-24 19:35:07 · answer #6 · answered by tgfann 3 · 1⤊ 0⤋
It means that the debt was noncollectable .
2007-03-24 19:35:35 · answer #7 · answered by lyllyan 6 · 1⤊ 0⤋
transfering money (debt) to another account
2007-03-24 19:34:52 · answer #8 · answered by unit ® 4 · 0⤊ 1⤋