Charge -Off debt in the credit report

What does the term Charge-Off mean on a credit report?

Moonchild,

Welcome to forums

Charge-off is a derogatory notation that hurts your credit score. Generally when a debtor fails to pay the bills, creditor adopts different techniques to collect it. If none of the methods are of any avail, they report it as a charge-off and the account is considered as bad debt, which means non-collectable.

Charge-off does not indicate that you are no more obliged to pay the debt. It is still your debt and you should pay it back.

Now if you have charge-off mark in your credit record, it clearly proves that you did not pay your bills for some reason or other and your future financers are going to consider it as a negative comment.

Generally a charge-off mark stays in your report for 7 years from the date it went delinquent. Hope this helps; feel free to ask your question if you have any more doubts.

If I may jump in here,

If you pay off debt , as you should, the creditor is then suppose to show it as 'paid charge off'. Which is still negative as they won't completely take it off once its paid but it does at least show that you paid and shows credit checkers that you did in fact pay. still negative but a little more softer than just a 'charge off'.

Once you get the charge off on your credit report, the damage has been done. And if you haven't started hearing from collection agencies by now, you will because where a lot of people get confused, they think the charge off means they no longer have to pay, but thats incorrect.

I'm in this situation so thought I could help. Shirley

Shirley,

I have one charge-off in my report for last 6 years. I know I am obliged to pay the debt, however the SOL is expired as per my state laws. Now if I pay the debt in full (I can, since I have got a job luckily), my lender will report it as ‘paid charge-off', right?

My question is how long this ‘paid charge-off' mark will remain in my report? Will it be there for another 1yr? Or it will take 7 yrs more to get it removed?

And what if I start paying it in installments and fail to continue? Thanks in advance

Once you pay a charged off debt, your credit report will show this account as 'paid charged off.' It is much better than an unpaid account. Also remember, the legal collection period will be renewed as per the statutes in your state. So, if you decide to pay, make sure that you don't leave it incomplete.

Negative information appears in the file for a period of 7 years as per the Fair credit reporting act. This duration begins from the date of opening of the account. In either case, whether you pay or not, your credit will remain hurt for one more year. Give a thought before you make a payment agreement.

okay, I will try to help you but-first off-I'm not a moderator here, I'm just a joe-blow debtor like yourself, that ran into some hard times and is trying to get straightened back out. But I have learned alot from being in this forum.

From what I understand, If you pay it now in FULL, it will be updated to "paid charge off", and still remain for the remainding year that you have left with it on your credit report. But it will show it as being paid.

If you make monthly payments on it, it will be renewed and start the cycle all over again and still remain as just a 'charge off' if you fail to pay off.
You would be better to either pay it off, so that your remaining year is a little more positive. since a "paid charge off' is a little softer than just a 'charge off'. Or wait out the year and let it go off your report all together since the SOL has ran out in your state.

this is my understanding.
Guys, jump in here and straighten me out if I'm wrong. But this is my understanding.
Shirley

sorry Ben, I see that you already handled this shirley

I know that once I make a payment SOL will get restarted. I am concerned about my credit report. So what comes out from your posts-

If I pay in full, it will be reported ‘paid charge-off' and remain there for another 1yr.

If I pay in installments, it will be there for another 7 yrs. Am I right?

Yes, once the FCRA reporting time is over, it will be removed from your file.

When you will pay the account in installments, the company will see the time you take to complete the payments. Once the account is paid in full, your file will be updated. By that time, if it is past the reporting period, the account will be automatically removed.

waht does SOL stand for?

Hi! SOL means-Statue of Limitations. Seven years is the SOL or statue of limitations on your credit report-after that it falls off, but the SOL of the debt itself is up to your state law. Many states have SOL set at 5 years, I live in Tennessee, so mine is 6. Hope I have helped here. In case you're wondering, there are TWO SOL time frames--one is the time frame of the debt itself. And the other is how long it can stay on your credit report. Shirley

Before you pay any debt, it is always necessary to check the SOL in the state where the account took place. If the statutes have expired, you are not legally obligated to pay the debt and no actions can be taken against you. However, if the accounts are paid off even after the statutes have expired, it will be updated in your file and improve your credit ratings.

Statutes vary as per the state laws. Shirley, 7 years reporting time is the exact term that is used in case of determining the stay of an account in the credit report. It does not relate with SOL.

thanks David, I will remember that correct term when it comes to the 'stay' on the credit report. thanks for correcting me. Shirley

Not a problem, Shirley. Its exchange of ideas and it's always good for learning. I know you have so much interest in learning new things everyday. You are doing a great work!!

thank you so much David--I am really trying. I like learning new things for myself but mainly for the reason of being able to help others here. In helping others, I am helping myself. And if someone here can learn something from what I've been through, then all the more better. I am more than happy to share and try helping. thanks again for the kind words. Just a few words of encouragement can sometimes go far. more than you realize. hugs, shirley

It's a great feeling when we know someone so much committed towards what they are doing. Since we are known to all of us here online only, it's nice that SOMEONE CARES. Take care, Shirley