3 Ways to Manage Charge-Offs

Although they sound harmless, charge offs are probably one of the worst things you could have on your credit report. These records mean that you are high risk and creditors should stay clear of you because you do not pay your debts.

Having charge offs is a serious matter if you want to enjoy the privileges that come with financial credibility. charge offs can actually be avoided if you are religious in paying your bills or speaking to your creditor if you missed payments. If you have not managed to avoid these charge offs and have them on your credit report, there are actually three ways that you can manage them.

* Wait for 7 Years: all charge offs are cleared from credit reports every seven years. If you are trying to settle an old debt that has been incurred almost this long, then it would probably be best that you wait. In some states, any partial payments on old debts re-set the statute of limitations period and it would permit the creditors or collection agency to file a lawsuit against you or harass you into payment. If the debt is relatively recent then you should consider other options. You would not want to be inconvenienced for seven years with transactions that require a good credit report.
* Pay a Smaller Amount: there are cases that the creditor will accept payment of an amount that is smaller than the original amount of debt owed. Unfortunately, this option is not advised as it will only get the creditor off your back. The charge-off will now be reported as "settled" instead of "paid in full". Many banks and financial institutions consider this as bad as having a charge-off but for people who have tight budgets, this option is good enough. If you are willing to endure having "settled" on your credit report in exchange for not being harassed anymore, then this could be the option for you.
* Pay Your Old Debt in Full: the best way you can remove the charge-off record on your credit report is by paying your old debt in full. Before doing so, make sure that you have negotiated the removal of the charge-off with the creditor or collection agency. You should also consider putting everything in writing as it would be hard to demand a removal if the creditor suddenly refused to do so even after payment was made.

Once the charge-off has been successfully removed from your credit report, you will now be able to restore your financial credibility and enjoy the privileges of a good credit score. After such experience, you must make sure that you will not be in the same situation again by being more financially responsible and more pro-active.