Whenever a creditor considers a debt as a bad debt and deems it to be uncollectible, they charge off the debt. Mostly a debt is charged off by a creditor if you have not made any payment towards the debt for a continuous period of six months. However, some creditors also charges off an account if it is past due for a period of 90 days. “Charge off”, also known as “write off”, may prove costly to your credit score. Whenever, an account is charged off by a creditor, it gets reflected in your credit report and may lower your credit score by as much as 100 points.
"Charge off" is considered a black mark on your credit report and cannot be generally removed before seven years. This negative listing may not only lowers your score, but also affect you in various ways. You may be denied a new line of credit, or may not qualify for re-aging your account if you have a charge off in your report. Most creditors usually sell off the account to collection agencies after charging it off. If you have a charge-off listed on your credit report, it does not mean that you are no longer required to pay off the debt. In fact, if the debt is within the Statute of Limitation period, the creditor can sue you to the court and bring judgment against you to recover the debt either by garnishing your bank account or your wage.
Charge off can be removed from your credit file only by the original creditor in exchange of partial or full payment of the outstanding debt. If the creditor agrees to remove the charge off listing from your credit report, you should get the agreement in writing. Now, if the debt has been sold to a collection agency, it cannot be removed from your report before seven years even if you pay it off in full. However, even if the creditor does not agree to remove the charge off from your report, you should try to settle the debt for less and pay it off in order to avoid judgment which the creditor might bring to recover the debt.
Since it is difficult to remove charge off from your report, you should try to prevent is as far as possible. For this you should contact your creditor whenever you fall behind your payments, explain him of your financial situation and try to negotiate for a repayment plan and pay off the debt. Mostly the creditors will agree to work with you. However, if you are not successful in negotiating with your creditor, you may appoint a credit counselor who may help you out.