Bad debt written off?

Question

I had a discussion with someone who said that companies will write off bad debt after 5 years of trying to recover it, i disagree, does anyone know the actual facts about this?

Answer 1

Ask your local citizens advice they will tell you the facts!!!

Answer 2

This always varies with the Company and the amount. Some will write off a small debt after only a few months of unsuccessful collection activity, due to the costs of recovery being greater than the debt. Large sums are only ever written off when the creditor believes that any amount collected will be lower than the cost of collection. Companies will generally seek redress thru the courts but may agree to accept, by volountary arrangement, a lower figure to be paid by monthly payments (an IVA)

Answer 3

First you need to understand what 'write-off' actually means. When you incur a debt, it is recorded on the creditors balance sheet as a receivable (an asset to the company). When they determine the chance of collecting in sufficiently low, they record a 'bad debt expense' and remove the receivable from their balance sheet. This does not mean you no longer owe the money. They are still allowed to attempt collections.

After your account has been delinquent for 7 years, they are no longer allowed to report the account on your credit report. Again, this does not relieve you of your obligation to pay. Most states have a statute of limitations that limits how long they can sue you for payment. Even after the statue runs out, you still owe the money. Without the ability to sue or report the account on your credit report, most companies won't bother to attempt collections. If it was worth the effort, they would have sued before the statute of limitations ran out.

Answer 4

There are some ODD answers here.
This is the FACT
Once you become delinquent the CC company will contact you for about 6 months to a year then typically they will write off the debt. That is called a charge off, means they are clearing the books, tax write off. They will get a collections agency to assist them, this is when a law suit is the most likely. Then after that it goes to one collection agency to another, they will do this for about 5 years, in that time they less likely to sue. Now after 5 years it will go to a huge collection agency that will buy the debt for 2 cents on the dollar and they will try anything to satisfy the debt, allmost anything will be profitable. with this last stage there is a statue of limitation usually 6 years depending on the state, to where they sue but the know most folks don't know that. Law suit is least likely here. The debt will fall off the credit after 7 years but they will continue to sell the debt over and over again.

Answer 5

It's 7 years and not 5 years. There is some old law that states if you dont pay anything or make contact with a creditor for 6 years the debt is automatically wiped out - I think thats why its 7 years before the debt goes from your records. There is also an old bye-law that states a debtor cannot be approached in the street and asked for money because that makes the debt void xx

Answer 6

It depends on the company and the amount of time you had to pay. Most companies will not wait until 5 or 7 years to write off (or charge off) an account. They will report it to the bureaus once they think the person is never going to pay.

Answer 7

Companies can write off a bad debt account anytime they want.
Writting off bad debt does not effect you, it is for the company to report it on their monthly financial statement as a loss to the company for that month. It will still be on your credit report.

Answer 8

It depends on the creditor. After seven years, they cannot report it to the credit bureaus anymore, but they can try to collect the debt from you as long as they want. There is no statutes of limitation on the debt. As long as it is unpaid, they can legally come after you for it, although most creditors just write it off as a loss.

Answer 9

The original credit company may but they sell the account to collection companies who will sue you in court place a judgment against you, and Garnish your wadges and/or property. Then that can take up to seven years to clean up. Best advice call your deters and settle with them, then work with a lawyer to clean up your credit.

Answer 10

it varies state to state eventualy they will write it off after the time has expired. if you check your credit report it will say on there if it has been wrote off and I think there is a term for it but it will say when it will be wrote off.