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Understanding “Charged Off” Debt

by Erin B. Shank

When some of your old debt has been changed on your credit report to ‘charged off,’ don’t get too excited. Although it may sound like you are suddenly debt-free, that unfortunately isn’t the case. What it really means is that the creditor has essentially written your case off as a loss for their business, believing your debt is likely to go unpaid.

Just because the credit company believes that you will not pay back your debt doesn’t mean that you shouldn’t, or that you don’t have to. A charged off debt will be reported to credit reporting agencies right away and will immediately affect your credit score. With a credit score affected in this way, you may not be able to make credit purchases, and renting an apartment or home can be extremely difficult for someone with unpaid debts. However, working to decrease your debt, even a little at a time, will look much better than choosing not to make any payments at all.

Fortunately, there are options for handling charged off debt, especially when you have multiple debts that continue to pile up. If you are unable to make regular payments, bankruptcy may provide the solution you’re looking for. Through the bankruptcy process, you can protect yourself from creditor harassment, as well as discharge or re-structure payments on certain debts. Although bankruptcy also shows up on your credit report, it is a comprehensive way to regain your long-term financial security and allow you to begin rebuilding your credit.

Speak with Killeen bankruptcy attorney Erin B. Shank, P.C., today by calling (254) 296-1161 to make an informed decision about your financial situation.

erin b shank

I have been practicing exclusively bankruptcy law in Texas for almost 40 years. Unlike most other law firms, my firm is exclusively dedicated to helping individuals and small businesses find a way out of their financial difficulties through the use of our nation’s bankruptcy laws.

Associations & Awards
  • Client Companion Award | Erin B. Shank
  • Avvo Review Badge
  • Preeminent Award | Erin B. Shank
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  • state bar of texas
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  • Avvo Top Attorney Badge
  • GreaterWacoChamber
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