How to Avoid A Credit Card Charge Off

A credit card charge off is simply a bad debt which creditors (banks) write off from their account balance. This occurs after a credit card user goes for six months without paying their credit bills. The creditor will no longer count the credit card as a bank asset in their books. But the debt is not canceled as many would want; in fact the card user still owes the creditor. For this loss the creditor will penalize the credit card user by indicating a charge off derogatory sign on his credit report.

This is not the end of your world, like debt collectors love to make people believe. Debt collectors have this tendency of making a charge off look very bad. Worse still they put too much pressure on an individual to pay up the debt. Many individuals cave in to their demands and are coerced in to commitments that are hard to fulfill. This pressure leads to financial problems that a many are not able to handle resulting to financial ruin. The media and banks have brainwashed us in to believing we cannot do without credit. For sure, if credit is used wisely it can make a big difference in some ones life for the good. But committing yourself to payments that in real sense you know is not within your reach is not being smart, it is being naive and unrealistic.

Keep cool and do not give in into threats or intimidation by debt collectors and don’t take it personal they are just trying to do their job. Make inquires with your creditor and negotiate a minimum payment plan to escape the charge-off and make future payments to keep your account active going forward. Be honest to yourself and only commit to payments within your reach. Come to an amicable agreement with your creditor on a lump-sum settlement preferably at 50% or even less only if you can come up with the money or negotiate on a monthly payment plan that you are comfortable with.

Many people make the mistake of allowing debt collectors to issue them with postdated cheques or giving them their bank details over a telephone conversation. The best thing to do is to make their payments via a money order or a banker’s cashier cheque. Another mistake people do is making verbal agreements regarding payments. This is suicidal in case things go wrong and you are not able to make the payment you have no proof of any agreement with the creditor. This is why getting the deal in writing is important and for both you and the creditor to sign the agreed workout plan.

If you do not have the resources to avoid the charge-off or the creditor has already charged you don’t worry you are still in a position to resolve the issue by negotiating with a collection agency or the creditor originally assigned to your account. Plea for a lump-sum payment and again ask for less than 50% and that your credit card report be deleted of all derogatory charges.