Debt Charge Off

How A Charge Off Effects Your Credit Report for Years

What does it mean if a credit card company has closed your account (for not paying it) and "charged it off"?

Can they then sic a debt collector after you? What if said debt collector (attorney hired by Citibank) takes you to court?

If the account has been charged off, do they have the right to come after you?

Roy

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A creditor “charges off” a debt when no payments have been received for 6 months or so. This is done for the creditor’s accounting purposes – it is planning to claim a loss on its taxes.

However, a charged off debt is still owed by the debtor (you) and the creditor can and, as you now know, usually will take steps to collect it. A charge off will also create a major hurdle to obtaining new credit.

There is more bad news. If the creditor is unable to collect the debt, it can report it to the IRS which will add the amount of the debt to your income for the year the write-off takes place.

Furthermore, the charge off will remain on your credit record for seven years and 180 days from the date of the first non-payment.

Even if you pay off the debt now, unless you reach some agreement with the creditor, your credit report will show a “paid (or settled) charge off”. This will make it difficult for you to obtain credit.

Many mortgage companies will require all charge offs be paid before they will issue a mortgage.

I would try to contact Citibank directly and see if there is anyone you can speak to in order to settle your case. If not, call the lawyer. Make an offer to pay as much as the debt as you can afford in exchange for removing the charge off from your credit reports. Citibank could report your debt as paid as “per agreement”.

Get the agreement in writing and then check your credit reports to make sure Citibank kept up its part of the deal.

For your own sake, you should do whatever is possible to get the charge off removed.

I hope this answers your questions.

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