Charge-off vs settlement - need understanding of implications

[galwquestions]

What is the name of your state? TX

Another Question for the masses --- Someone please help me understand a "Charge-off" versus a "settlement" in terms of a credit card --- and the severity to the credit report - what if you also had say 90 or 120 days and then brought it current --- will that point a more positive picture on an already bleak credit history? Also - if the account charged off - would it help to pay it back in full say 2 months down the road? thanks

[seniorjudge]

A "charge off" is merely an accounting term meaning that the creditor is tired of trying to get its money back so will stop messing with the deadbeat.

It's meaningless as far as the debtor goes.

[galwquestions]

thanks - but perhaps from a credit report standpoint --- I would assume a chrage-off is worse than an account being settled for less than the owed amount --- unfortunately - this situation is happening to my sister and her family had a major crisis which landed her in this situation - so the kind "collector" offered her the scenarios - of settlement vs charge-off - she is trying to do the right thing - a settlement makes sense but if she could - she would settle on paying some amount to catch it up and try to keep it open --- she may be able to do this - so I just needed to know if there was major differences between the 2 or if she should try somehow to work with them on payments ... she really is not a deadbeat - just bad things happen to good people...

[boswd]

charge off is an accounting term they use and has filed it as a loss of doing business for their tax purpose and is now going to be sent to collection. One of the worst besides bankruptcy for your credit report. Once it has been sent to collection, even if you pay it off it's on your report for 7 years.

Settled is just the status of your account. Has some negative affect on your credit score, that's why if at all possible always pay the full amount because Paid always looks better than Settled and won't have as much impact on your credit score.

To answer your question, if it hasn't been charged off yet and they are offering a settlement and she can't afford to pay in full, then yes, take the settlement and get it in writing.
Settled is MUCH MUCH better than charged off. Once's it's charged off not only does that have great impact on her credit score, it means it's on it's way to collections. Ohhh same Monster with another head.

[boswd]

If your sister's debt is charged off, it will almost 99% sure it will go to some place like this

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