What are the basic rules/laws regarding charged-off credit card accounts. Once charged off can it be sold stil

Question

I have three charged off accounts on my credit report, which the orginal creditor charged off. Collection agencies (one being a law firm) are attempting to collect. I thought once an account was charged off collection activites ended. Can delinquet accounts be sold to other firms even though they were charged off?

Answer 1

"Charged off" is really a misnomer... it is only an accounting category that your lender has put your debt in. You still owe it, plus any expenses your lender has paid for legal, court and collection efforts. Your original lender has probably sold some of their charged-off loans to companies who concentrate on collection.

Pay them off and start rebuilding your credit rating. You won't regret it.

You should know that most lenders are required to report unpaid debts (loans) to the IRS. The IRS calls them "income" (money was lent to you & you didn't pay it back = income). The IRS will expect to see those charged off amounts on your next tax return, reported as income. Do NOT mess with the IRS.

Answer 2

Two of the worst types of delinquencies are a collection and charge-off. Both events are the result of not paying a particular bill for several months. Because they indicate a significantly late payment (35% of your credit score), charge-offs and debt collections are terrible for your credit score. With some effort, you can overcome these. Dispute wrongly reported collections or charge-offs. You can dispute inaccurate accounts with the credit bureaus. Send a letter letting the credit bureau know why the account is inaccurate and wait for a response. Hopefully, the error will be deleted the first time. If not, you can dispute the account directly with the business that listed it on your credit report. Get a $0 balance. Here’s the thing. Paying off a charge-off or collection balance won’t delete the item from your credit report and it won’t help your credit score. Once the blemish is there, the damage is done at least for the short-term. However, a paid balance is always better than an unpaid one, especially if you’re trying to get new credit or a major loan like a mortgage. Before you pay, draft a pay for delete letter offering to pay the balance in full in exchange for having the item removed from your credit report. The creditor or collector may deny your claim but it’s worth a try. Settling the debt is also an option, if your creditor agrees, but keep in mind your credit report will reflect that you settled the account. A settlement can also hurt your credit score. Worst case, just pay the balance in full. Or, if it’s really old, like 6 or more years, you could just wait and let the account drop off your credit report. The credit reporting time limit for these types of delinquencies is seven years. For a charge-off, it’s 7 years plus 180 days from the date of the first delinquency. Try sending a goodwill letter, if the account has already been paid. A goodwill letter is simply a request that the creditor or collector remove the account from your credit report out of goodwill. Briefly explain why you became so late and hope that whoever receives your letter is feeling generous that day.

Answer 3

Yes, they sure can.
Charge offs just mean the original creditor gave up collecting the debt and took a loss; which gives them tax breaks too.
The debts can now be sold for less to 3rd party collection agencies. Now that the collection agency has the debt/s, they CAs will still try to collect the original amount due. However, collection agencies can allow you to settle for less than the original amount. I've done it.

To the poster above: The law firm or any collection agency cannot threaten you with legal action unless they intend to do it.
(Fair Debt Collection Practices Act)
And the CAs can sue you. Also, regardless of whether the amount is $200 or $2000, if you're sued, you should appear in court and make arrangements to pay. And yes, they can garnish your wages. Once they win a judgment and you still do not pay and they've made every effort to collect, they can make a request to the court to garnish your wages.

And you do not have to claim charge offs on your tax return. The banks are responsible for reporting the charge offs to the IRS, as it's their loss.
If you settle with your creditors/Collection agecies for $600 or more off the original balance, they will send you a 1099C. The 1099C will have the amount of debt that was forgiven and you will claim this as income on your return.

Answer 4

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RE What are the basic rules/laws regarding charged-off credit card accounts. Once charged off can it be sold stil

I have three charged off accounts on my credit report, which the orginal creditor charged off. Collection agencies (one being a law firm) are attempting to collect. I thought once an account was charged off collection activites ended. Can delinquet accounts be sold to other firms even though they were charged off?

Answer 5

When a company charges off your account that means that they will sell the debt to a collector. They "charge off" to another company. It depends on what collection agency absorbs your debt as to how they will go about collecting. A law firm will probably call you to court or at least threaten you with a court appearance, but as long as your debt is under a certain amount you don't even have to show up. The only thing that can be done is what is already been done to your credit report. They can call you and threaten you with all they want, but really they can't do sh*t.

Answer 6

A creditor can sell or charge off accounts. However they can report two accounts on the same debt but cannot collect for both accounts when one account is paid. One account must report as a Sold/Transferred or Paid Charged Off.

Answer 7

the above two answers are totally correct. top answer is incorrect. I manage a credit department and I charge off accounts each day. I assign them to an outside law firm to attempt to collect for our company, Now not only do you owe the charged off amount, you owe "Collection Fees" as well, could be 30 - 40 % of the charged off amount.