Does a company have the right to try to collect again after putting a 'charge off' on your credit report?

Answer 1

They can and usually will attempt to collect, but once it is charged off you should not respond to the creditor. Instead you should write a letter to the credit reporting agency to have it removed from your file.

A "charge off" does not invalidate the debt, render it uncollectible or allow it to be removed from the credit report.

A charge off indicates the original creditor has given up standard collection methods, will likely refer the account to a collection agency or sell it to a third party.

A charged off debt can is still subject to all allowable action under the FDCPA including a lawsuit against the debtor.

For some reason, a lot of people seem to think that they no longer owe a debt if it has been "charged off". NOT TRUE. This is just an accounting entry to prevent the financial institution from reporting interest income that is UNLIKELY to be collected and removing assets that are PROBABLY worthless from their balance sheet. If you loaned your buddy $50 last night, and you were thinking of buying something in the near future, you would probably count that money as being available for the purchase. But a year later, when he has left town without repaying you and you have no contact with him, you no longer EXPECT to receive the $50 but he STILL OWES you, and if you ever see him again, you'll probably remind him of the debt. Same with a charge off. The bank still wants to collect it and has the right to collect it, but doesn't expect to collect it.

The charging or writing off of a debt is only a required accounting entry by the creditor. It does not effect you, or change the amount you owe, or that you owe it.

It does not change any of the legal methods to force collection that were available before making the entry.

All it does is make the creditors accounting statement recognize that an asset (your receivable) that it expected to realize, and already recorded as income, is not going to happen. they are taking the charge to their books for the expense of your not paying, or that it is now considered unlikely you will pay, and the asset does not exist (or in bank terms, is no longer productive).

It does not mean they won't pursue it...in most cases they must. If they get paid (anything or all on it), that amount is considered income and booked as a recovery to replace what they took as a a charge.