Q: What does it mean if creditors put “charged off” on your credit account?

How long will it appear on your credit history? Does it mean they turn you over to a collection agency?

A When a creditor puts a “charge off” on your credit report, it means the creditor no longer believes you will pay the bill and has written the debt off of its books. Often, they then sell your debt to a collection agency that pays pennies on the dollar for the right to try and collect your debt. The collection agency will then come after you to pay up. They will hound you until you agree to pay what they say you owe. While it is legal for them to pursue you, they have to live within the rules of the Fair Debt Collection Act. For more information on the Fair Debt Collection Act, go to the Federal Trade Commission’s website, ftc.gov, or log onto http://www.ftc.gov/cp/conline/pubs/credit/fdc.htm for an easy-to-understand Q&A about legal debt collection practices.

Published: Feb 4, 2005