Personal Bankruptcy Creditor threatening to write off my account as a bad debt

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ilbsnu

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I just received a letter from one of my credit card companies which I haven't made a payment to in 5 months. I am not working and am considering bankruptcy as I owe a lot of credit card debt. The message reads:

"The delinquency on the above referenced account has reached a critical point. This account may be charged off as a bad debt within the next few months, if you do not take action."

How can them writing off my debt to them a bad thing for me?

Confused
 
If they write off your debt it will damage your credit for years.
You will no longer owe them, but they will sell the debt to a collection agency who will continue to try to collect... so you will just owe someone else and have worse credit. A collection agency can sue you over the debt the same as the original creditor.
Also, depending how they handle the write off, the amount written off may be reported to the IRS as income and you will have to pay taxes on it.
If you don't have the money to pay then there may not be much you can do but prepare yourself for hard times. It will take years to repair your credit and get back out in front. Many people have learned hard lessons about credit cards the same way. Every time you use one you are spending borrowed money. Never spend more than you can afford to pay back in full each month.
 
"Write off" is an accounting term - it doesn't mean the debt has been sold or forgiven.

(Though it usually goes hand in hand with the debt going to collections).
 
Will filing bankruptcy before the write-off help in any way?

Bankruptcy will allow you to get a fresh start. It will eliminate most garden variety debts. It can't hurt to speak with a bankruptcy lawyer. The initial meeting is normally free of obligation or costs. It is a great way to learn of your rights and responsibilities. It won't magically rebuild your credit, however. Make an appointment and visit a local bankruptcy attorney soon.
 
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