Charge-offs and collection accounts are two of the most damaging marks that you can have recorded on your credit reports.
These accounts tell any prospective lenders you may want to get a loan from that you will default on the loan and they would not be able to get their money back from you.
If you are like me you probably know that there are many different reasons why this might happen to your credit rating.
It is not always the fact that you do not want to pay but for one reason or another you were not able, which could be due to job loss, family tragedy or even divorce to name a few.
In other cases the account is a total error and has no business on your credit report.
In either case, sooner or later you need to get your rating back on track and the only way to do this is to learn a little more about how credit entries on your credit report work.
To begin with, each debt that you have has what is known as the statute of limitation.
This is the timeframe which a creditor or collection agency can legally collect a debt from you.
After this timeframe has expired, there is not any legal action that can be taken against you in reference to the debt.
So in other words, in my opinion there is not a good reason to pay the debt.
But keep in mind that this has nothing to do with the item being recorded on your credit reports with Equifax, Transunion and Experian.
The law governing the items on files is known as the Fair Credit Reporting Act.
This specifies the length of time such negatives get to remain on your report.
You need to understand how this act works because it gives you the ability to legally dispute charge-offs and collection accounts on your report!