You might disagree, but hear me out on this one. There are many things you need to know about a charge off account. Most consumers when they have an account in that stage, they just give up because they feel that they don’t have a chance to make things right. But, with these killer tips you will have a better understanding on the concept of a charge off account.
Killer tip one – Can you tell me how to avoid them?
When the bank can no longer collect on a debt, it writes of the account as a bad debt, which is called a charge off. Allowing your account to fall so far behind that it turns into a charge off account will not only damage your credit score further, but also it will also cause you other financial problems.
- Ask the bank to suspend the late payments until you catch up.
- Ask the bank about hardship programs.
- Ask the bank to freeze your account until you can catch up with your payment.
- If you have the money, try to settle your debts for pennies on the dollar.
Killer tip two – What happens if I’m approaching the 180-day deadline?
If you don’t resolve your delinquent account before 180 days, the account will take one of the following courses:
- Write the account off and the lender will take a tax write off. If the debt is more than $600, then the lender is required to send you a 1099-c with the amount charged off account amount and report the debt to the IRS. The IRS considers the charged off account as a gain to you, therefore you must pay income taxes on it.
- Sell or assign your debt to a collection agency
- Assign the debt to their prepaid legal department for a possible lawsuit.
Killer tip three – How do I deal with it if it’s on my account?
Dispute the information inside of the negative account listing, for example, the date the account was open, the high balance, or the amount owed. If any of the information is incorrect, you have a good chance of getting it deleted by contacting the creditor and negotiating to have the adverse information removed. If you were not able to get the item removed, take the paid as agreed indication. After paying the debt, start your basic dispute method. During your dispute process, the negative item you just settled will be easy to come off because the creditor is already paid.
Killer tip four – Even though the account is charged off, can the creditor still collect money owed?
Yes, just because the account is charged off does not mean the creditor can’t come after you. They can still employ a third – party collection agency to collect the debt from you.
Ok, now you understand the various ways you can stop this negative account, and how it could damage your credit report if you do nothing. Take this information and apply it to your situation when it comes to a charge off account.