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Debt charged off -- do I still have to pay?

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Dear Debt Adviser,

If a debt is charged off, am I responsible for paying off that debt?

More On Charge-offs And Your Credit:

"debt management"

Be aware that some collectors will still attempt to collect by phone and mail, even if they don't have the option of suing in court.

Besides damaging your credit score, an unpaid charge-off can really harm you when you want to make a major purchase using credit, rent an apartment or apply for a job. Most businesses are wary of someone with any long-term, unpaid credit accounts. Many will overlook a previous history with late payments if you eventually paid what you owed, but they're usually less forgiving if you did not.

Your charged-off accounts will stay on your credit reports for seven years and then must be removed under the Fair Credit Reporting Act. So, if you choose not to pay, you will have to wait that long for the charge-offs to no longer affect you.

My advice is to work out a payment plan to pay what you owe in as little time as possible. You made a mistake and hopefully learned some things that will keep you from making the same mistake in the future. The best way to move forward is to clean up the debt problem you created by paying what you owe and not falling into this trap again.

Resolve to do a

better job of managing your finances by putting together a spending plan based on your own personal goals and then keeping to it. Borrowing is OK, but only if you're sure it will fit into your budget. Most importantly, be sure you save up an emergency fund to contend with unexpected expenses or unemployment. I advise six months' worth of living expenses as a good starting goal.

If the debt is older than the statute of limitations in your state, you may not have to worry about being taken to court. However, keep in mind it will still be reported on your credit report and may affect your ability to get credit, jobs, promotions, insurance and apartments for seven years from when the account became delinquent.

Good luck!

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To ask a question of the Debt Adviser, go to the "Ask the Experts " page and select "Debt" as the topic. Read more Debt Adviser columns and more stories about debt management.

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