Charged Off - What does this mean

[paulandberyl]

Hi

 

I have a letter from a bank that says "the balance of the account was charged off 0n 18/06/2002 and the balance as of that date was £0.00"

Does anyone know what this means.

 

Thanks

[cerberusalert]

Many people mistakenly think when a debt has been charged-off that it's been cancelled by the creditor. This is not true.

 

Companies, including creditors and lenders, have profits and losses every year. They make money from profits and lose money from losses. When a creditor charges-off your account, it's declaring your debt as a loss for the company.

 

Even though the creditor has acknowledged your debt as a loss in its financial records, you don't get away free. Your creditor will add a negative entry (a charge-off) to your credit report and continue to attempt to collect on the debt.

 

An account is usually charged off after 180 days, or six months, of less-than-minimum payments. The charge-off will remain on your credit report for seven years from the date it was charged-off. If you pay the debt, it will be updated with a status of "Charged-Off Paid" or "Charged-Off Settled." Either is better than a simple "charge-off" status, but are still undesirable.

 

The only way to remove a charge-off from your credit report is to wait the six-year period (five in Scotland) or negotiate with the creditor to have it removed after you pay the account in full.

 

But having said all of the above, in your case if it was charged off in 2002 it will now be Statute Barred & it should not show on your credit file nor can they take any enforcement action against you.