Charged-Off Debt | Can Creditors Collect On A Charged-Off Debt? | Summary and Q&A

TL;DR

Charged off debt is not forgiven or written off completely but can still be collected upon by debt collectors or through lawsuits.

Key Insights

• 💱 A charge off does not mean the debt is forgiven or forgotten; it just changes the accounting classification for the creditor.
• 🈂️ Debt collectors may purchase charged off debts for a fraction of the original amount and attempt to collect on them.
• 💯 Ignoring charged off debts can result in legal consequences and further damage to credit scores.
• ⌛ The statute of limitations determines the time frame within which a creditor can sue for the collection of a charged off debt.

Transcript

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Questions & Answers

Q: What happens when a debt is charged off?

When a debt is charged off, it means the creditor has classified it as a loss for accounting purposes but can still pursue collections or legal action to recover the debt.

Q: Can I ignore a charged off debt?

Ignoring a charged off debt can lead to further complications, such as lawsuits or aggressive collection efforts by debt collectors.

Q: How long does a creditor have to collect on a charged off debt?

The statute of limitations for collecting on a charged off debt varies by state but is typically several years after the last payment was made.

Q: Should I consider bankruptcy if I have charged off debts?

If you're facing serious debt problems, it may be worth consulting with a bankruptcy attorney to evaluate whether bankruptcy is a viable option for your specific situation.

Summary & Key Takeaways

• Falling behind on credit card payments can result in a charge off after about 180 days of default.

• A charge off is an accounting term that classifies the debt as a loss for the creditor but does not absolve the debtor from paying it.

• Charged off debts can be sold to debt buying companies who may pursue collections or file lawsuits against the debtor.