A creditor who charges off your account or places your account in collections will almost always report those actions to the credit reporting agencies.
Learn more about credit reports and the type of information you’ll find on them.
For accounting or tax purposes, creditors “charge off” debts. The process involves selling the debt to another organization—usually a debt collector—so that the company doesn’t have to show the account as a loss on its books. Taking the account off the books helps the company’s bottom line look healthier.
Usually, creditors charge off a debt about six months after you stop making payments on the account.
If a creditor charges off your account or places it in collections, it will notify the credit reporting agencies. It will tell the reporting agency the date your delinquency began, which is important when determining how long the debt can continue to show up on your credit report.
The date shouldn’t change if the account is transferred from one collection agency to another—as can happen multiple times in many instances. It also shouldn’t change if you dispute the account.
Making a payment on an account can be tricky, however. A debt owner must bring a collection lawsuit within a certain amount of years, called the statute of limitations. Sometimes making a payment on an old debt can extend that period, giving the debt owner more time to file a suit.
Find out about the collection actions available after getting a money judgment against you.