What Does Charged Off As Bad Debt Profit-And-Loss Write Off Mean On Your Credit Report

It means that you fail to pay the amount due within the time period specified and your Creditor now treats the uncollectible amount as Bad Debt to be written off as loss and deducted from Profit & Loss account.

When you account is “Charged Off” , then it doesn’t mean that you are no longer liable to pay but, still you are liable to pay your dues, so the creditor / lender demands from you to pay the dues through notice or any other means and informs the collection agency about the recovery of remaining amount payable by you.

The negative effect of charged off as bad debt profit and loss write-off on your credit report and credit scoring is huge for atleast seven years. During that period, your account will be removed and new credit card issuer may also decline your application if you applied for new credit card issuance as charged off is a negative impact on your credit scoring. The card issuer may also impose limitations on you credit facility if you application is accepted.

Now, the collection agency has two options to collect over due payments from you:

1. It may become the representative of original creditor and asks you for the collection of payment by making a contract agreement between you and your creditor.

2. It may make payment of the amount due from you to original lender and then collect from you later under a debt agreement. In that case your liable to pay to the collection agency as it is now your creditor.

How To Remove Charged Off Account Status on Credit Report

You need to pay you dues as soon as possible or by contacting your original lender to give some time for making payments or lower the amounts due.

The best solution is to use Debit Card as it will save you from extra charges in the form of Interest and avoid the loss of burden of failure as it is a card which is used only when you have amount in it and it is accepted as a cash payment for purchase and having Checking / Current account opened in the name’s of holder by issuer of debit card in its bank on the request of client.