A Charge Off is a debt that has been deemed by a creditor to be uncollectable.

Charge offs are listed as an expense on the companies income statement; a charge off reduces the companies net income.  This is the process of removing an asset from the company records because it has become worthless.

Even though the company wrote the account off, it does not mean that the debt has gone away.  Typically, the creditor will assign the account to their internal collections department, assign it to a third party collection agency, or sell it to a debt buyer and the debt buyer will try to collect the debt.

Charge offs appear as a number 9 on your credit report.  A number 9 is the worst status a credit account can have on your credit report and has a negative effect as it is factored into the credit score.

Most credit card companies will charge off debts after 180 days of delinquency.

Also known as a Bad Debt and a Write Off

Charge Off Accounts should never be paid in full to the orginal creditor or the collection agency because the debt can be settled with a debt settlement plan. By enrolling the debt into a debt settlement plan, you can expect to have at least 50% of debt eliminated. Settling the debt will have the same outcome as if you paid the debt in full.

A Credit Counselor at FH Financial Service can help you eliminate your charge off accounts.