La Jolla, CA – April 15, 2015

Q. What does a “charge-off” notation mean on my credit report?

A. A common theme in my credit card debt relief law practice is to know what you owe and have a plan to pay off your credit card debt. The best way to get a true picture of your debts is to run your credit reports from the three major credit bureaus, Equifax, Transunion and Experian. I recommend getting all three reports from annualcreditreport.com. This site will provide all three reports for free and you can save them to your computer for future reference. It is important to get all three of your credit reports since your creditors might not report to all three bureaus. If you have debts you have not paid for quite some time, you may see a notation that your account has been charged off. So what does that mean?

A charge-off is the declaration by a creditor that an amount of debt is unlikely to be collected. This occurs when a consumer becomes severely delinquent on a debt. Traditionally, creditors will make this declaration at the point of six months without payment. But this does NOT mean that you don’t have to repay the debt. Your creditor considering the debt “uncollectable” is just a term that has no bearing on your duty to pay back your debt. Your creditor is still legally entitled to collect on this debt. At this point, your creditor can continue collection efforts or send your debt out to a collection agency or sell your debt to a third-party.

If you are receiving mail from entities you have never heard of, chances are your debts are with a collection agency or debt buyer. Some common names you might see are Portfolio Recovery Associates, Midland Credit Management, Cavalry Portfolio Services, Encore Capital Group, Absolute Resolution Corporation, NCO Financial Systems, and Enterprise Recovery. It is important that you have these creditors verify that you actually owe a debt to them before sending any payments to them. As long as you can verify that this is the proper person to make payments, it is crucial that you realize that you might have options for repayment.

A few options to consider are repayment of the full balance over an extended term, bankruptcy, or a debt settlement. Going back to my original theme, have a plan. If you are facing debts that are charged off, you face the potential of getting sued due over your non-payment. Before it gets to this point, you need to develop your individual plan to see what works best for you. There is no “one-size-fits-all” solution when looking at your debt relief options. Consider consulting with my firm for a free consultation to help you figure out your best debt relief options.

Daniel R. Gamez, an attorney focusing exclusively in debt settlement, is licensed to practice in all state and federal courts in California and Texas. Mr. Gamez owns and operates the Gamez Law Firm in La Jolla, CA. For more information, please contact Daniel Gamez at 858-217-5051, daniel@gamezlawfirm.com or visit gamezlawfirm.com.