A charge off of your credit card account is issued by the creditor when you don't pay your debt in time. A charge off is a declaration of the creditor that your debt is counted as a loss for their company. You will no longer be able to buy anything using that credit card account but you are still responsible for paying off the debt. It is very advisable to avoid charge offs by making payments on time.
Time for Payment
The duration before your account gets charged off differs from bank to bank. The time allotted for you to make your payments can be anything from three to six months. You should use this time to make your payments on time and avoid bad credit reports. Charge offs will appear on your credit report for a duration of seven years. Even if you make your payments after this your credit report will still have this black mark. The only way you can remove the charge off from your report is to wait for the full seven-year duration to expire.
Getting a Charge Off
When a company charges off your credit card account, it does not mean it gives up on the money you owe them. You still owe the company the same amount of money. The charge off is just a bookkeeping formality to declare a loss where they can't expect to get their money back in time. It does not in any way excuse you of the debt or being forced into paying. You still owe the money, and the bank can use a collection agency to enforce it. You will also be held accountable for any fees associated with collecting the debt.
The Interest Rate
The interest rates will continue to accrue on your debt. These interest rates can be transferred to the collection agency. The collection agency will have the same rights as the bank had in the original agreement you made with the bank. This means they can enforce the recuperation of the money, interest rate and the fees you owe the bank. The law of the state you live in decides the interest rate and fees and not the bank.
Additional Fees
You will have to pay any additional fees that are necessary for collecting the debt you owe. These fees are set by your state jurisdiction and can be enforced by the bank you owe money to or the collection agency. Just like interest rates, the fees will have to be paid by you to settle your charge off. It is in your best interest to remove charges from your credit report.
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