How to Settle Charged Off Credit Card Debt

Settling a charged-off credit card debt allows you to resolve the delinquent account by paying less than the full amount owed. The process, which is known as debt settlement, often results in significant savings. Credit card companies and debt collectors often settle charged-off accounts for around 50 percent of the balance, according to the MSN Money website. Credit card companies generally close credit card accounts after you fall six months behind. The card company lists the account internally as a write-off for tax purposes, but still holds you responsible for the debt. Your credit report is then updated to show the account as charged-off.

Instructions

1

Get a copy of your credit report from Annual Credit Report -- a website operated by major credit bureaus TransUnion, Experian and Equifax. The site offers free reports as required by the Fair Credit Reporting Act. You're entitled to three free reports every 12 months. Visit the site to view and print your report.

2

Review your credit report to find the charged-off account. The credit card company may still be managing the account or may have assigned or sold it to a debt collector. The credit report will list the current contact information, including the name of the company and a telephone number.

3

Call the credit card company or debt collector. Give the representative your name and account number, and also your Social Security number if asked. Tell the representative that you would like to resolve the account through settlement. Start with a low offer of 20 percent of the balance. Continue negotiating until you have a deal.

4

Get the terms of the agreement in writing before making a payment. The terms should include the due date and the amount that you have agreed to pay. The terms should also show that the account will be considered "settled" after you make the payment, and that your credit report will be updated to show that the account was "settled for less than the full balance."