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Charge-offs and Bankruptcy

On credit reports, some unpaid debts may be noted as “Charged Off” by creditors. This means the the creditor has written this debt off of there books and considered it as bad debt. It does not mean that they cannot continue to collect on the debt. They may continue to contact you about the debt or they may hire a collections company to collect the debt for them. It also means that the debt will continue to damage your credit history even though it is labeled as a charge-off. So, if you are under the impression that a charged-off debt can no longer be collected, you may be surprised to still get communication for collections regarding this debt. It is important to address all charged-off debt to allow your credit situation to improve. A debt charge-off is merely a label that signifies that a company considers the debt as bad debt and instead of an account receivable debt.

A bankruptcy will completely eliminate the debt when the debt is discharged in the bankruptcy. The debt will no longer be collected on and it will be discharged in bankruptcy on your credit report. At that point, your credit report can begin to improve. If you have credit card debt that has been charged-off, you can use a bankruptcy to discharge the debt to permanently stop collections activity based on the debt. This will ensure that your credit will start to repair itself. One bankruptcy petition can include multiple credit cards and unsecured debt and will eliminate them with one single filing. A bankruptcy is not limited to just credit card debt. Other types of unsecured debt include past due utilities, cell phone bills, pay-day loans, automotive deficiencies, and many other types of unsecured debt.

If you are interested in learning more about bankruptcy and how it may help you and your family’s situation, please contact our Riverside or Orange County bankruptcy attorneys at (855) 257-7671.

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