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Does Using Credit Counseling to Consolidate Debts Count as a Charge-Off?

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Does Using Credit Counseling to Consolidate Debts Count as a Charge-Off?

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When consumers run up credit card bills that they cannot repay, the card issuer will eventually “charge-off” the account. This means the credit card company gives up on trying to recover the debt and sells it to a third party collection agency. Even if you pay the debt collector, at this point, your credit report will marked with a “charge-off” or “account settled for less than total owed.” The good news is that consumers who enter into debt management plans do not receive the black mark of a “charge-off.” But their credit reports are not left unblemished, either. Instead, all accounts involved in the debt management plan are marked “does not pay account as agreed.” This is not nearly as bad as a “charge-off” and infinitely better than a bankruptcy, but it still looks bad in the eyes of some lenders – even after you’ve settled your debts.

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