If you found charge offs on your credit report, you may be asking yourself: What is the Definition of a Charge Off?
Rather than give you a raw definition of a charge off, consider this background: Every bank or other lending institution runs accounting reports at the end of every month to determine their profits and losses. They track what sells and what doesn’t, what they make money on, and what choices have caused then to lose money.
When you are over 180 days (six months) over due in payment of a debt, such as a credit card, a car payment or a mortgage, you are determined to be in default of that loan, and are most likely not going to pay it. The company will then declare your debt as a “charge off,” which alerts the credit reporting agencies that you have defaulted. They are writing the debt off as “uncollectable” and will list you as such when it is time for the company file their federal income tax.
Even though it may be of no fault of your own, such as a job loss, illness, etc., you are still responsible for a debt you’ve incurred. The company declaring a “charge-off” status does not release you from the debt, however.
You are still responsible for a charged off debt.
It may be in your best interest to try to work out a repayment plan, even if the debt has now gone to a collection agency for follow up.
A “charge-off” will reflect poorly on your credit report, showing as a negative report and lowering your credit score. Next to a bankruptcy or judgment, it is the worst items you can have on your credit report.
It will remain on there for seven years and the only way to remove it from your credit report is to negotiate a payment plan with the creditor, wait it out, file credit bureau and/or creditor disputes.
When we sought approval from the bank for a home loan, I had about 6 charge offs on my credit report – from credit cards, utility bills, cell phone, and various other debts.
Once we hired lexington credit repair, the first items they deleted were the charge offs. You can read our entire story at www.creditforcouples.com.