A charge-off is one of the worst account statuses you can have. Charge-off typically comes after you’ve been late on your credit card for over 180 days. That means you’ve missed at least six monthly payments by the time your account is charged-off. If you can settle your accounts before they reach charge-off status, you may be able to avoid having such a negative blemish on your credit report.
When Does Charge-Off Happen
It helps to know when your accounts are going to charge-off. The charge-off clock starts ticking from the date you miss your first payment. So, if your payment was due on March 5, then March 6 is day 1 of the charge-off clock. By September 2, your account would be charged-off. You can use an online date calculator to get the expected date of your charge-off. Just enter your last payment due date and add 180 days to see when your account will be charged-off. You want to settle your account before this date.
Know the Charge-Off For All Your Accounts
To help organize your settlement offers, write down the date you expect all your accounts to charge-off. It will also help if you write down the date your accounts reach 90, 120, and 150 days late since you’ll also probably want to make settlement offers on these days, too. You’ll want to make settlement offers on all your accounts, but you probably want to give priority to the accounts that are closest to charge-off.
How to Settle Before Charge-Off
Many credit card issuers will let you settle your account before charge-off, but that means you likely have to act fast because there will only be a short window of time to complete the settlement. You also need to have the money available to settle your accounts. If all your accounts are set to charge-off around the same time, or even within a few months of each other, you may not be able to save up for your settlements. Instead, you’ll need access to a larger lump-sum of money that you can put toward settlement of such accounts.
Timing of Settlements Before Charge-Off
What makes it even trickier to settle accounts before charge-off is the fact that most creditors are unwilling to settle accounts until they are at least 90 days delinquent. Some creditors won’t consider settlement until the account is 120 or 150 days past due. And you may encounter some who’ll insist they don’t settle accounts and then when the account is a few days away from charge-off, they’re suddenly willing to negotiate. If you want to settle before charge-off, you may have as much as 90 days to work with or as few as 3 days.
Because settlement timing can be so unpredictable, you need to have the money ready to pay the settlement when the creditor accepts the agreement. You’ll also likely need access to a fax machine so you can send and receive the settlement agreement within a few hours or even minutes rather than waiting several days for the agreement.