What happens when you get a charge off on a credit card? I realized that it’s disasterous for your credit report but do they sue you for the amount owed at some point? How long would this stay on your credit report?
Just like an other debt, they will usually sell the rights to the debt to a collection agency. The collection agency will try to collect it from you and send you menacing letters and phone calls. The debt will be listed on the three major agencies and adversely affect your credit score for a maximum of 7 years.
I do see people getting sued, esp when the charge off am’t is very high. Many card companies don’t sue, because the debtor probably has alot of bad debt (usually happens to more than one card), and the debtor will just go file bankruptcy, which prevents anyone from collecting on the debt.
So, they run you throught the collection agencies.
It is always better to work out an agreement and pay them through new terms, and PUSH FOR A SETTLEMENT…which is making them agree to stopping interest charges and settling for a lesser amount.
Tell them you are likely to file bankruptcy if you can’t work something out. They do not want this, and the chances of settling the debt are better.
Hurt credit? Sure, but most scoring models review the past 3-4 years, AND a paid debt is WAY better than an unpaid one. Sure, it’s negative that is went to collection or was settled, but if it’s paid it’s alot less negative. And, paid debts don’t usually stop mortgage approvals, whereas unpaid debts wil prompt a mortgage denial and the mortgage company may insist you pay the debt or put the debt money in escrow if you feel you have abeef with the credit card company.