Disclaimer: We are not Certified Financial Managers, however, we do have over 20 years of experience working in the finance industry.
“What does it mean when an account status says “Charge Off”? Does this mean I no longer owe this amount?”
The short answer, absolutely not. If you have not paid a balance on contract in which you signed, you are obligated to pay it off to whomever has acquired the debt.
Here’s the breakdown:
First, let’s start with what the term “charge off” means. It simply means that the original creditor has given up on being repaid according to the original terms of the loan. It considers the remaining balance to be bad debt, but that doesn’t mean you no longer owe the remaining balance amount.
When an account is charged off by the original lender it goes directly to collections. The collection agency will then attempt to recover the balance-often by calling, emailing and mailing frequent notices about the discrepancy in payment, plus any interest and penalty fees that may have accrued.
Related: Trucking: How to Get a Small Business Loan
The collection agency can be affiliated with the original lender in one of two way. Either they represent the lender, or they have bought the debt and have become the new debt owner. Either way, that fact remains the same, you signed a contract agreeing to repay the debt, and that contract remains in effect until you have paid off or both parties have reached an agreement to repay a lesser amount.
If the debt is sold to a collection agency, you should pay the collection agency, not the original lender so be sure to get the correct information on the detail of your debt.
FYI: The “charged off” account and any subsequent collection accounts will be removed from your credit history after seven years, but will have a very negative impact on credit scores during that time.
To learn more about how you can clean up your credit and receive the best rate possible during your next equipment purchase, call our office today and speak with one of our specialist at 737-717-3100.
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