People who are struggling financially in Nashville may find themselves behind on paying certain bills. Since credit cards are considered unsecured debt, meaning there is no collateral tied to it like there is for something such as a mortgage or car loan, they often become one of the first payments that people stop making. When a credit account goes unpaid for a certain period of time, the creditor may charge off the account, according to the Balance.
A charge-off essentially means that the account has been closed. The customer will no longer have access to credit and will not be afforded the opportunity to make minimum payments. In order to prevent the creditor from pursuing legal action to collect the debt, the account would need to be paid off in full.
One of the biggest consequences of a credit card charge-off is that it ends up being reported and will show up on the person’s credit report for seven years. If the account is paid off in full, that will be reflected on the credit report but doing so does not remove the record of the charge-off from the report.
If the creditor decides to pursue payment from a customer for the outstanding balance that it has charged-off, it may decide to sell the debt to a collection agency, NerdWallet advises. Consumers who are contacted by debt collection companies should be sure to verify that the debt is correct and that the agency is on the level. They may also wish to consult with a credit counselor.