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Consumer Watch: Charge-off debt, what you can do

(FILE)

Charge-offs is one of the most serious negative marks you can have on a credit report. And it won't go away easily .

Despite the name, a charge-off debt doesn't mean you don't owe the money anymore.

That's just a tax term meaning the debt is unlikely to be collected under the original loan agreement, but you still owe the money.

A charge-off means that the your debt hasn't been paid in a long time, sometimes six months of non-payment.

If you are having trouble paying something don't wait, try to negotiate with a creditor before it becomes a charge-off.

If you wait, the negative mark will stay on your account whether you ever pay it or not.

Even if you bring an account current, Experian, a credit reporting agency, says it will stay on your credit report for 7 years.

If you already have a charge-off on your account your credit score has already been hurt, but you can work on increasing the score by avoding any other charge-offs and making your bill payments on time.

If you are trying to apply for larger loans, like for a car or house, the charge-offs could mean you don't get the loan. Or get a terrible interest rate.

You may be forced to wait the 7 years to get more favorable loan terms in the future.

When an account is charged-off, it is often sold to a debt collector.

It is your right to negotiate a payment for less than the amount owed once you've been hit with a charge-off.

However that payment for less than owed will show up on on your credit report.

But you will no longer owe your creditor or debt collector any money.

Checking your credit report at least once a year can help you figure out if there are any errors or problems you need to work on now.

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