If your debt is being charged by a credit card company or financial institution, you still have to pay it.
You just learned that you are late in paying your credit card and that your debts have been charged by the issuer.
That may sound positive. But it’s not time for celebrations. You are still responsible for paying your debts.
The concern should be your credit rating. Does a charge-off affect your credit score and is there anything you can do about it?
Do you still borrow?
According to the National Consumer Law Center, credit card accounts are usually charged after 180 days of non-payment. From a company’s accounting perspective, debts are no longer carried as book-worthy assets.
For a company, charge-offs are treated as expenses or losses.
However, the debt will not be cancelled.
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If your debt is being charged by a credit card company or financial institution, you still have to pay it. The lender will report the charge to the credit department, affecting your credit score.
The company or financial institution will either attempt to collect debts from you through the internal collection department or continue to transfer it to the collection agency. Another option is for the company to sell its obligations to the debt buyer.
In these cases, your debt may appear twice in your credit report from the original creditor and from one time from the collection agency or debt purchaser.
If the collection agency reports your account to the credit agency, the report will display the new collection account. This is a light item that can lower your credit score.
Charge-off should be paid as you are legally liable for them. You will need to pay your balance until your account is paid in full, settle with the lender, or be discharged from the hospital through bankruptcy.
Your Credit Score
You don’t want a charge-off on your credit report.
A charge-off tells potential future creditors that they cannot repay the balance.
It could affect your ability to qualify for a loan, rent an apartment, apply for employment, or buy a car.
Charge-off is considered worse than collection. Using collections may be negotiable and may allow you to remove bad debts from your credit report. It is difficult to remove it from your credit report.
Paying off your charge-off account will help you improve your credit. It will not be removed from the report immediately, but update the status to “Paid Charge Off.” This can help potential lenders and help them return their credit scores faster.
negotiation
If you are facing a charge-off, first make sure your debt is actually yours. If you believe your debts aren’t yours, contact your credit department and start an investigation. They do this for free.
If handed over to the collection, ask about your payment plan. The collection agent is probably already ready for you. If not, put one for them. But make sure it’s a payment plan you can afford.
Debt settlement is also an option for many collection agencies and businesses. It depends on the agent or company, but you may be able to reduce what you owe by 30-50%.
You can negotiate yourself or go through a debt relief company.
Will it disappear?
Charge-offs are similar to delayed payments and what is considered negative. They will remain on your credit report for up to 7 years.
Seven years start with the date of your first missed or late payment on charging.
If it’s been seven years since the charge-off, check your credit report and make sure it’s deleted. If not, contact the credit department. They contact the creditor.
Restrictions
Limitations laws relating to legal liability. It does not affect the amount of time left on your credit report.
Despite the laws of restrictions, the collection agency or company can still try to collect debts from you, but they cannot sue you for debts.
I’ll pay it off!
If your creditor claims you for your debt, you are not off the hook. They can still try to collect the debt or hand it over to the collection agent or debt buyer.
Plus, your credit report will show you a 7-year charge-off, which could hurt you financially. However, paying back bad debts can still help your credit.
Epoch Times Copyright©2025. The views and opinions expressed are those of the author. They are for general informational purposes only and should not be interpreted or interpreted as recommendations or solicitations. Epoch Times does not provide investments, taxes, legal, financial planning, real estate planning, or other personal financial advice. Epoch Times is not responsible for the accuracy or timeliness of the information provided.
