Have you been told by a creditor that your debt is about to "charge-off"? If you're behind on your bills, unable to keep up with payments on your credit cards and other debts, sooner or later you will hear a creditor representative threaten you with the dreaded "charge-off." So what is a charge-off anyway?

What banks and bill collectors call a "charge-off" is the point at which the creditor writes off the account balance as a "bad debt."

Should charge-offs be avoided if possible? Does the prospect of a charge-off mean you should panic if you have no way to pay the bill? No! Sure, good credit is important.

* Don't be intimidated or threatened by pre-charge-off collection tactics.

* Call your creditor to find out the minimum payment necessary to avoid the charge-off, and subsequent payments to keep the account current going forward.

What should you do if you simply don't have the money to rescue the account from charge-off, or if the account has already been charged off by the creditor?

* Negotiate a lump-sum settlement with the creditor or collection agency. Get everything in writing, don't disclose your checking account details, and follow up to make sure the creditor reports the matter correctly on your credit report.

Credit Card Charge-Off - What Does It Mean and What Should You Do About It?