What Does Charge Off Accounts Mean?

There’s a prevailing myth among some consumers that declaring bankruptcy—specifically, Chapter 7 Bankruptcy—isn’t such a bad idea, when faced with lots of debt. In fact, if you buy a bunch of things like a new television, car, hot tub, stereo, etc., and then declare bankruptcy, you’ll be able to wipe out your debt and keep all of your new found goodies. Sounds great, doesn’t it? Well, hold on a second.

As discussed in the previous article on Bankruptcy, it isn’t as cut and dry as that. Simply declaring bankruptcy won’t get you out of the hole you’ve gotten yourself into. In fact, in many cases—especially a Chapter 7 bankruptcy—some of your property can and will be sold in an attempt to pay off your creditors. And you don’t get a say in what you get to keep. On top of that, if you try to conceal any of your assets to protect them from liquidation, it’s considered a federal crime, and you’ll suddenly find yourself in a whole lot of hot water.

Additionally, filing bankruptcy—even if you get to keep your stuff—will still create almost as many problems as it solves. For one, it sticks on your credit report for a full ten years. That’s ten years of denials for loans on a new car or home, rejections for an apartment or even just renting a place to stay, significantly higher interest rates, and even the possibility of preventing you from getting a job. A recent study found that people with bankruptcies on their credit reports had interest rates on loans from 15 to 20 per cent higher than those without, and could on average paid between $5,000 and $8,000 more for the same car as someone who’d never had a bankruptcy.

The bottom line is that if you can avoid getting yourself into a bankruptcy, you’re best doing so. While you may be able to shake off your creditors—in fact, once you file for a bankruptcy, an immediate cease and desist order is sent out to all your creditors which prevents them from contacting you further—you’re still in the middle of financial chaos. Since the economic downturn, more people than ever are facing this tough decision, however, and a few will have to accept that this is their best option. But for them, that’s true. Insurmountable debt is one thing, and that’s what bankruptcy if for. If you’re simply attempting to evade your financial obligations, it’s a much better idea to speak with a banker or a credit repair agency, and get your finances under control the responsible way.

Rebecca White-Glanders is a prolific author.Charge Off Accounts, writing articles to educate the public on a wide variety of topics. Ms. White-Glanders has a degree in Journalism from Ball State University.Accurise Reviews. She spent several years working in the legal department of a collection agency, giving her a unique perspective on how credit works.Accurise scams.