charge off?

[helpsoneeded]

I got a letter saying my account will be charged off. What does that mean and what is next? Thanks

[Mary Irene]

In addition, the charge off is still a 'live' debt. It doesn't go away unless the creditor 'forgives' the debt, which you will know about if you get a 1099 form to file with your taxes. Now, until the statute of limitations runs out in your state, any debt buyer can and probably will buy that debt from whoever you had the credit with and try to collect from you. This goes on and on. Chase is the worst, they will give it to a company called Mann-Bracken that will make your life hell and take you to arbitration and win. See Budd Hibbs website for more info on that. The first thing you should do is go on google and find the letter that asks them to validate your debt. This has to be done within 30 days and send it certified mail. Keep a copy. Most companies will drop you and sell the debt and you'll get a new letter. Send the request to validate again over and over it goes on. Your choice is to do this until the statue of limitations runs out, or they serve you with intent to obtain a judgement. You HAVE to answer to this or they will get a default judgement on you. Even if you just go to the court and say "I've asked for validation and it was not provided". If they haven't brought proof, the judge will rule in your favor and toss it out, thus freeing you from that one debt forever. If you want, you can try to negotiate with these debt buyers for a reduced payment, about 20-30% off. They will want a fast payment. If you don't want to, just play the game until they give up. No matter which way you do it, your credit is tanked (probably already is anyway). But yes, so is everyone's else now. I feel good having all this company. I went through this by myself when it first started in 2005. It was scarey. But having gone through it, I have learned SO much. These people are bullies. They only have power over you if they can scare you. So don't be scared. Worst case scenario, you file bankruptcy or they garnish you. Actually, in most states, garnishment is cheaper. They can only take 25% in my state (and that's the federal one too). When I was in Ch 13 paying out 100% they were taking 50%. I dropped it after the govt bailed out wall street cause it pissed me off. Also, one company bought all my debt (B-Line also know as Round-Up Funding). They are bankruptcy and junk debt buyers. Fight them. They have no proof of your claim. I'm hoping more people will call or write their State Representatives with complaints about these debt buyers now that they will be affecting a larger amount of regular folk, which would force the govt to regulate them. Hope this info helped.

[treehugger1]

I concur with the issue of garnishment might be less expensive for some folks, particularly high-wage earners. Do a google search for "informal bankruptcy" and you will find that there is a much larger proprotion of debtors who choose to not file BK and force creditors/CA's to go the garnishment route.

[BKParalegal]

I concur with the issue of garnishment might be less expensive for some folks, particularly high-wage earners. Do a google search for "informal bankruptcy" and you will find that there is a much larger proprotion of debtors who choose to not file BK and force creditors/CA's to go the garnishment route.

Because having multiple judgements on your credit report and stacked garnishments on your paycheck for years is so much better, than wiping the slate clean with BK.... sign me up!!

[Mary Irene]

Because having multiple judgements on your credit report and stacked garnishments on your paycheck for years is so much better, than wiping the slate clean with BK.... sign me up!!

No one who would qualify for a ch 7 and get their debts wiped would do this. Only someone who makes too much to pass the means test and would be forced into a CH 13 would. Garnishment takes only 25%. Ch 13 takes as much as it can.

[treehugger1]

Absolutely MaryIrene! Not every one who "qualifies" for BK gives a sh*t about their "credit." In the future, if one can walk into a bank with 20% cash down for a home or auto and have definite prrof of ability to make the monthly payments, then I believe they will qualify for loans. In the future, the credit score will not be as big as someone's willingness to lay down 20% and show a past history of timely payments on secured debt.

If all my creditors would get garnishments and wait their turn, my unsecured will be paid in three years. The dates of last activity under the current FICO scoring methods will vanish long before a chapter 7 or 13 will. In addition, charge-offs are offset by any curent paid as agreed. I now have 7 chargeoffs based on 16 creditors. The others I have paid as agreed. As a result, my FICO scores are now back to 580 - 620. While I don't know the "formula" that is currently used by the three CRA's, the chargeoffs appear to be balanced by the "paid as agreed" accounts. I'm also convinced tht I could walk into my local auto dealer with 20% cash down and secure reasonable financing based on my take-home wages, even after consideration of 25% wage garnishment.

Again, I don't believe I'm the standard on this board. I am a HIGH wage earner and in my humble opinion, I am far less risk to lenders than those folks who have good FICO scores but their debt/income ratio does not pan out.

We will hear more and more about informal bankruptcy over the next few years, as folks with reasonable income walk away from unsecured debt (the key word here is unsecured.)

[Mary Irene]

I agree. We never thought so many people would walk away from their houses either, but they did, in droves. They will do this with the debt also. Good riddance debt buyers (getting rich off our backs). They need a law saying that they can only collect what they paid for the debt. Isn't it considered loan sharking if they get to collect $10,000 (plus bogus fees) when they paid only $1000 for the debt? Our laws are just so screwed up.

[GoingDown]

I agree. There are lots of reasons people either wait to file bankruptcy or simply don't file it at all.

I'm judgment proof as much as almost anybody can be, and so I personally don't care at all about lawsuits and judgments.

The cheapest and easiest thing to do in my case is to do absolutely nothing.

I happen to live in Arizona which has a statute of limitations on judgments of 5 years. They can renew it 90 days before it expires for another 5 years, but my guess is that they won't bother with it because they won't get a penny from me for the first 5 years. I know people in Arizona who have had judgments against them and the judgment creditor didn't bother renewing the judgment at the 5 year point and the judgment expired. So, I think the same thing will happen in my case.

If they renew the judgment, I will consider filing chapter 7 bankruptcy at that time.

[treehugger1]

BB, yep, there comes a time when you need to let the other party know that you will not take their sh*t laying down. Do they read such responses? I don't know, but ink and paper is cheap. Washington and Oregon have some similar laws, and unless you live in some major metroppolitan area, it can be costly for a national CA to eventually get to an attorney in your area who is willing to sue on the CA's behalf. At this point, I would guess the debt is now worth only pennies on the dollar to the CA who instigated the lawsuit. In the meantime, the original creditor has written off $10k - $30K in unsecured debt, which was probably worth far more to them as a "write-off" then worrying about whether or not some CA could collect it for them. Now, its not as if the original creditor made money, but the losses they incurred are not as deep as some might think.

I like the idea of requesting the amount that the CA paid for the debt. If one did come to court, this might be an interesting query under discovery.

One also needs to keep in mind that "charge-off" is strictly an accounting manuever. Many conmpanies charge-off accounts and continue to collect on the past debt; CAP1 seems to be one of these. I don't think this is illegal. They just have to remove the account from the "accounts receivable" column. As a result, it is always worth your time to determine if the CA owns the debt or has just been assigned the debt. If the CA owns the debt, then the question of what price they paid is legitimate. If the CA does not own the debt, my policy is to think f***off.

You know me, I'm not an attorney. Just thinking out loud!

[Mary Irene]

I like that letter. I will borrow it when the debt buyer who bought my bankruptcy debt comes a calling again now that I dismissed it. He he.

[CompTweaker]

BigBoy, I want to sincerely apologize to you for a lot of what I said in our arguments. I just read this thread and my opinion of you was based on thinking you were more biased towards collections and the people who work and profit from that industry. I even thought it was possible you were still working in collections. This is a forum with a lot of anonymous people, so you never really know who you're talking to. I've missed a lot of threads around here and if I had seen this one before our argument, I'm sure I would have responded differently and maybe not taken as much offense to what was said between us.

[CompTweaker]

<--- Hugs CompTweaker and then pokes him in the eye for being a butt...

Its all good, this is really stressful stuff for a lot of people... But really I don't open my mouth on stuff unless I think I can contribute something beneficial. I may not agree with what a lot of people want to do and if your up to the challenge by all means go to court and smack em around. But for a lot of people that come in here, they run at sound of the phone ringing. Scared to death to talk to a collector, so I can't imagine those people standing in a court trying to defend against an action that has very limited defense and really requires you to force them to make their case against you. You have to be semi-skilled to do that. I am not say you can't, or anyone else can't, just want people to know, once you open a can of whoop-ass, you can't put the lid back on...LOL