Make no mistake: unpaid and ignored debt is not forgotten debt. Even if a creditor gives up on ever getting paid, they'll often list the item as a "charge off" or a "profit and loss write-off."
This doesn't mean that you no longer owe the debt. This just means that your original creditor has written the outstanding debt off against their corporate taxes. While this process allows the collection agency to minimize some of their loss, your credit report remains in danger.
Charge offs are a prime example of how a single late payment, if left unpaid and unaddressed, can grow into a much larger, more damaging problem. If you are thinking about not paying your current financial obligations, consider the impact it can have on your long-term credit goals.
Falsely, many consumers believe that the term, "charge off" implies debt freedom. In fact, it's quite the opposite: a charge off notation can remain on your credit report for up to 7 years. What's more, simply paying off past-due charge-offs won't neutralize their negative status. Paid charge offs still show up as severe negatives. It's important to note that credit reports don't just show your current credit situation, but they also show what your credit situation has been in the past. Therefore, a past charge off can do a great deal of damage to the credit score even if it was paid off. This is one of the great ironies of the credit reporting system; paying your past-due debts does little to immediately increase your credit score.
Lexington Law has helped thousands of clients remove questionable charge offs from their credit reports. In 2010, through effective credit bureaus challenges and legally crafted creditor interventions, Lexington Law challenged over 13,000 creditors like Sallie Mae, Verizon, Discover, and the U.S. Department of Education to assist in over 150,000 charge off removals.
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"First and foremost, thank you thank you thank you and thank you!!!!!!! If I wrote a thank you for every negative mark taken off my credit reports, this page would really be long :) I hope this email reaches you in good spirits. THANK YOU FOR DOING YOUR JOB VERY WELL."
- C.R., Lexington client*
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