Next to bankruptcy, charge offs are one of the most damaging items you can have on your credit report. However, the term “charge off” can be confusing and many people don’t understand what charge-offs are, or why having them listed will hurt their credit scores.
The first thing to realize is that charge-offs do not free you from the financial obligation to pay a debt. Though the collection calls from the original creditor will likely stop coming, and you won’t receive notices in the mail anymore, this is only the calm before the storm.
Charge-offs actually indicate that the creditor is counting your debt as a “loss” for accounting purposes – and the creditor can and often will continue to try to collect on the debt via other means. Usually, by contracting with a collection agency, or using their own in-house collections team.
Table of Contents