A charge-off is a decision made by a creditor to freeze your account after six months of non-payment. You won't be able to use the account to make any purchases after it has been charged-off, but you'll still be responsible for paying back the charged-off balance. It looks very bad on your credit report, as it can affect your credit for at least 7 years. You'll have a hard time borrowing money and your credit score will plummet. Avoid a charge-off by taking these steps.
Make the minimum payment each month. The best way to avoid a charge-off is to keep up to date with your payments. At the least, you need to make the minimum payment each month. Make debt repayment a priority and commit to doing this. Each month you are late with a payment or you can't make a minimum payment, you are one month closer to having your account charged-off.
Repay your other debts. If some of your credit accounts are dangerously close to being charged-off (4-5 months of non-payment) work toward paying off those debts. You will need to catch up on all of your missed minimum payments. If you can't afford to make these payments, you need to find other sources of income that will permit you to do so. Get a second job, sell off your assets, and stop spending frivolously. Don't make your credit score any worse by allowing your debts to become close to being charged-off. Repay your debts as quickly as possible. (As much as you will struggle to find the money to pay your debts now, consider the alternative of the years of dealing with a bad credit score and charged-off accounts. It's no question what your best choice is - pay off your debts now, before they lead to a charge-off.)
Stay out of debt. Avoid getting into a charge-off situation by staying out of debt in the first place. Learn to pay with cash and challenge yourself to keep only one credit card for emergencies. Live within your means and don't buy what you don't need. You'll appreciate your efforts to avoid a charge-off and huge debts in the future. By saving money that you're not paying in interest or debt repayment, you'll have money in savings, a solid retirement account, and a good credit score. That's enough to make anybody strive to avoid a charge-off and pay off debts.