Can someone explain to me what chargeoffs are and what collection agencies do?

Question

I do not understand

Some say paying charge offs hurts ur credit some says not paying them hurts it


Ok wtf what does it all mean

Answer 1

A charge off is when the company that gave you the credit deems it to be noncollectable. This means that they have given up on trying. It is a bad thing to have this on your credit report. However, a collection agency is a third party (business) that picks up these accounts and attempts to collect the debt. They will pester you forever unless you know what rights you have under the FDCPA. (fair debt collection practices act.) There are a lot of things that they cannot do. Just be careful if you get served papers saying that you have a court date. (if you ignore them you will lose.) You can tell collection agencies not to call you (have to make this request in writing though) make sure that you have good notes on who you talked to and what time. Then if they violate the notice that you sent them you can sue them and make some easy money.

Answer 2

charge-offs DO hurt your credit. That's basically a debt that you never paid and that the creditor finally "wrote off" as a loss.

Collection Agencies normally work for the creditor and get paid a percentage of the amount that they're able to collect from the debtor.

Answer 3

And let's not forget that the chargeoff is potentially taxable income to you as well.