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Common Questions

The most frequently asked questions regarding your credit.

What is a "charge-off" and is it bad?

A "charge-off" occurs when a creditor elects to "write-off" the non-performing account as a business loss and no longer can rely on the account as a business asset. This does not meant that the creditor no longer will attempt to collect on the debt or gives up its right to do so. A charge-off can occur at different times for different types of accounts. For instance, an auto loan, a furniture loan, a home loan are all examples of "closed-end" accounts. These types of accounts have a specific term of repayment and an original beginning balance. By law, these types of accounts have to be charged-off by the 120th day following the original date the account becomes past due. An "open-end" account has no specific term and is referred to often as a "revolving" account, like a credit card, department store card, or gas card. These types of accounts must be charged off by the 180th day following the original date the account becomes past due.

A charge-off will have a sizeable negative effect on your credit score. However, there is hope to rebuild your score if you have charge-offs. The credit repair attorneys at Smith & Garg deal with charge-offs by negotiating with creditors on behalf of the consumer to settle the outstanding balance in exchange for a more positive credit report re-characterization of the charge-off. While a charge-off should be avoided, simply paying the debt is not the best answer. You need to get something in return from the creditor, and the credit repair lawyers at Smith & Garg can help you get the most out of settlement negotiations.

Contact the Credit Repair Attorneys at Smith & Garg today to get started!