Can you provide any information on profit and loss charge offs?

Profit and loss charge offs are used most often by credit card companies. They write the debt off on their books as uncollectable rather than spending time and lawyer's fees to collect them. Charge offs are considered a serious black mark on your credit report. Only bankruptcy and foreclosure are worse.

However, even if these companies aren't actively trying to collect from you, these debts are still owed by you to the company. If you refinance your house or apply for a loan, most mortgage companies will make you pay off these debts. The reason is that these debts can be turned into a lien against your property.

Liens matter to a mortgage company for a couple of reasons:

1. When you sell your home, the monies owed against a lien (plus interest) must be paid off to clear your title.
2. Liens are in a higher position than a mortgage, meaning they get paid off before the mortgage company gets its money. If the mortgage company has to foreclose and you have lots of liens on your home plus a mortgage, the mortgage company potentially could lose thousands of dollars.
3. Just because these debts are charged off doesn't mean that the creditor won't come after you later. Creditors have the right to sue you and win a judgment in court until the statute of limitations runs out.

If you need to get charge offs removed from your credit report, you can:

1. Pay them off.
2. Declare bankruptcy.