“My Debt is a Charge-off. Do I Still Need to Pay It?”

In August 7, 2007
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It’s time for me to bust another common debt-related myth that I get asked about frequently. Basically, the myth is that once a creditor records a “charge-off” (where your account is declared as a bad debt and a loss is recorded by the creditor), then the creditor no longer has a right to attempt further collection on that written-off debt. Read More …


  1. Hello Charles,
    I just wanted to share with you that I came across your site in search of general information regarding information about credit and what-not just to stay updated with times. I’ve read many of your replies and just wanted to thank you for helping out so many people. Keep up the good work!

    • Dantheman, thank you for visiting the site and posting this comment, much appreciated.


    Please note that this thread is officially closed. Also, no further comments or questions will be accepted on the topic of auto repossessions, as there should be ample information contained in the above replies for readers to assess their situation.

  3. Kirby, the Statute of Limitations is 5 years in IL for credit card debt. It’s possible that you have “re-aged” the account by making payments, thus resetting the clock on the SOL period. Depending on what CA is involved, it probably does still make sense to settle the account. I would need to know a lot more about the situation to make a firm recommendation one way or the other. If you decide to proceed with settlement, feel free to purchase one of my program levels to get the training and support you need to avoid further beginner mistakes (like making payments on an account past the SOL).

  4. Hello, I really need help to clear this question. I had a credit card with Amex and everything was fine up till 2003 when I lost my job and all went wrong. I was out of country for about about 5 years, and now I live in IL, I opened the account when I was in WA. Here is what my credit report says
    Status as of Jun, 2010
    Date opened Sep, 1996
    Date of last activity Jul, 2005
    Date closed Not Reported
    Largest past balance $5,976
    Terms Not Reported
    One thing I like to mention is that it was sold to a CA and I made payments for about 8 months till 2008/9 and they stopped taking out from my account, now it is back with AMEX.( one of the three reporting agencies show last reported 2005 and other sometimes show 2009)
    My question is how long will it be reported on my credit reports and I should I settle this account as they have been sending my 60% off , offers?
    Thank you in advance for help

  5. Hello, I live in Texas I was reading over the blog to see if maybe you had already answered my question through someone else’s…. I seen a few silmiar posts but didn’t exactly understand. So my question is…. If I have an item from the orignal creditor that is about to fall off of my credit report in a couple of months will the collection agencies that they sold my account to fall off also if i haven’t made any payments on them? Oh …. and it is a credit card debt. And in a few months it will be past the 7 years. So really I’m just trying to see if the collection agency will be taken off also at the same time as the original debt falls off.

  6. Jay, this is a tricky situation that requires the help of a good consumer attorney. See if you can find someone from NACA to help (www.naca.net). But my take is that you first have to verify the current status of the title — it’s possible that Ford transfered title when they sold the account to a debt purchasing company, assuming that they did sell it rather than retain ownership. If this is the case, it may be why they were unwilling to consider an offer. But I really do think you need some legal help for this situation to get it resolved in your favor.

  7. My deceased wife’s car was never paid off. I tried to put the car in my name but Ford Finance would not do this for me. Therefore I was not able to license the car . I continued to make payments on the car but when the plates were due I was told I have to have the auto in my name. Since there was over 2 years of payments due, I quit paying since I was not able to licensed the car. Ford wrote the car off. It incenses me that ford would not allow me to be on the title ( my wife did not put my name on the title because it was a work car and tax purposes )I contacted Ford to make an offer on the car as Ford never repoed so I still have the car altho it is 2 years past since being written off.They refuse to deal with me. Any suggestions how I can get a title? The car was bought in Tx;

  8. Anissa, no, you should not send a letter to the creditors about the SOL expiration. There would be no point in doing this, since all your original creditors are long gone by now, and the files would all be in the hands of debt purchasing firms. You simply won’t be certain that the letters are going to the correct companies, and they would probably just ignore such letters anyway. On accounts where the SOL is expired, and there are no judgments against you, then you don’t need to worry about losing your home in the future. They could not have taken your home in the first place. If you do get sued again though, be sure to get some legal help to *answer* the lawsuit. Since it would be a “time-barred” debt under the SOL, then the court would simply dismiss that case. Regarding the existing lawsuit/judgment situation, you can verify whether there are two judgments by (a) checking your credit report in the public records section, or (b) calling your local county courthouse where the suit would have been filed.

  9. Hello Dear, i am a resident in Calif. and have very old debt that has since expired under SOL for any lawsuits-pnly one creditor sued me before the SOL expired, by september 2011 all my old debt will be eligible to be removed from my report based on the 7 year criteria. My question is it advisalble to send a certified letter to all the creditors and collection agencies advising that SOL has expired and they can no longer sue me to ensure no future further unexpected action once the 7 years has passed and if yes what is the proper wording? another question if i dont do anything and leave it alone, in the future if i own a home can they do anything againts me for these debts? Sorry…last question back to the creditor that did sue.This was Capitol one and ofcourse i ignored it and found myself with a notice of my wages being garnsihed, upon receipt of the notice I contacted the law firm and made arrnagement, when i called them they informed me that i had another judgment against me for a second capitol one card but that they would start collecting on that account once i paid the firts one. it had been so lond i didnt even rememebr having wo accounts.How do i find out if infact they do have two judgments, the Winn Law firm continue to send me letters of collection for the second account. if they do not have a second judgment what can i do to prevent them from gettimg one, the SOL has definitely expired. thanks for your time

  10. Leisa, yes, if the company has illegally re-aged an old derogatory credit entry, then you have the right to sue them. It’s probably a debt purchasing company that is responsible for this fresh entry on your report. You can try disputing the entry with the credit bureaus rather than with the company in question. And to pursue legal action, you can get some help from a NACA attorney in your area (www.naca.net).

  11. Hello I was going to purchase a home and couldnt get a loan because of a collection that was on my equifax credit report (the only one of the three) the collection date was 8/09. It was under chase but through a collection agency the original charge off date was 3/96 by chase. I called the collection agency and they were very rude and just kept telling me to pay it, it also has gained about 1,600 dollars. I sent them a dispute and validation letter and got back a piece of paper with the original creditors name written on it and the charge off date of 3/96 by chase, and that I made a partial payment to them on 9/04.? It was a law firm that sent me this signed by a paralegal. Can they reage my old debt like that and put it on my credit report and arent they suppose to give me original documentation with signatures and stuff not just a piece of paper with my name and name of original creditor after I sent them a validation letter. I live in NY and am very upset they ruined it for me and my husband to get a mortage. Can I sue these people? thanks

  12. Melody, the 4-year SOL period for CA starts from the point at which default occurs on the accounts in question. So you may or may not be beyond the SOL period depending on when during 2006 the defaults occurred. After the SOL expires, as long as you’re paying attention and don’t fall for any “tricks,” then they can no longer pursue legal claims on the accounts. At that point, it usually makes little sense to do anything further. Paying a 4-year-old collection account means a fresh *negative* entry for another 7 years on your credit report. So it makes more sense to just wait until it drops off after an additional 3 years have gone by.

  13. My boyfriend has a lot of debt from his first marriage, all in his name only. This includes a car that was reposessed. The rest is credit card debt and medical bills. This all happened in 2006. We live in CA. Does this mean he cannot be sued for any of this since it has been 4 years? We fortunantly don’t have to worry about his credit score – we are in a home not in his name and I have the cars. Most of this debt has been charged off, so I am wondering if we can just let the rest get charged off since he has no more risk of being sued/garnished – and then just wait the 7 years to have it be removed from the report. This would still dissapear quicker than a bankruptcy. Thanks for answering my questions.

  14. Julius, you’re probably getting collection activity from a debt purchaser who bought the account for pennies on the dollar. No, they can’t just add it back to your credit report because they want to. That is called “re-aging,” and it’s illegal for them to do this. Also, an account 16 years old is surely well past the Statute of Limitations for your state of residence.

  15. i got a call the other day about a car i defaulted and took back in 94…. 16 years ago. it was of course put on my credit back then but has come off and actually i have nothing on my credit now that i am aware of. can they put this back on my credit? wouldnt that be getting hit 2x for the same thing?

  16. Ron, I cannot answer this for you, sorry. You need to direct these questions to the attorney you handled your bankruptcy petition, or some other attorney located in your state.

  17. Hello, I have a question about bankruptcy and secured property. I filed chapter 7 in dec 08 and was discharged april 7th 09. I had a boat loan that i was current on through aug 09. (i could not make the payment in aug, sept.) I called the bank at the end of oct and they told me the loan was charged off at the beginning of oct. they had contacted my attorney during the bk and requested a re-affirmation of payment wich my attorney denied (???) They also moved the loan to the recovery dept even as i continued to make current payments. anyhow, when i called in oct. they told me as long as i made my payment of 750.00 the loan would not be charged off….so i did. I got a copy of my credit report and it shows the loan as a secured load that was charged off in bankruptcy with a balance of zero. I also recieved a letter from the bank stating that i had no more obligation to pay them but they may use there right to repo the boat…I do not want to do that as ive already paid 26000.00 towards the purchase of 42000.00. My question is, If i continue to make payments on the boat, my original loan contract is null and void, can they come and repo the boat whenever they want because there is no agreement? also, are they able to collect from me after they charged it off as a bad debt?

  18. Ernie, you should verify this with an attorney working in the real estate sector, just to be on the safe side that it works the same way with mortgage debt. But the way it works with unsecured debt is that a 1099-C is the end point. Whatever amount has been written off and indicated on the 1099-C is canceled debt. It means they *forgave* that amount, and you would have a valid argument that you are completely done with this account. If it was reported to the IRS as income to you, game over as far as I’m concerned. They can’t have it both ways, declaring the cancellation and then still attempting to collect on the account.

  19. Live in California, unemployed for almost 1 year. Currently on a Home Modification Program and current with 1st Mortage payment(from another BANK)

    My Credit Union sent me a 1099C for the FULL amount owed on my 2nd Mortage with Box Number 5 (Was Borrower personally liable for repayment of the debt?)marked NO

    Called my Credit Union and ask about it and they sent another copy this time Box Number 5 is now YES.

    My tax accountant said that a 1099C is a CANCELLATION OF DEBT that I need to report to the IRS as income, and I no longer owe the Credit Union, Debt is CANCELLED (~$30K).

    Credit union said they tahy are merely charging it off and I still need to pay them back.

    No clear answer yet from anyone.


  20. Kendo, since this is an active legal matter, and I’m not an attorney, I really cannot advise you here. You should discuss this matter with a qualified attorney in your state. The key question is whether Mann-Bracken had purchased the account, sued on their own behalf, and then got the court judgment — or were they merely acting on assignment to the original creditor as a third-party collection law firm. M-B worked files in both categories, so I have no idea which situation you faced when the lawsuit was filed. I’m assuming it was a purchased account, and M-B sued on their own behalf. If that’s the case, talk to the court that issued the judgment and see if they have any information on a receiver being appointed to wind up the M-B files as part of M-B having recently filed for bankruptcy. Maybe you are done, but most likely some other company will purchase the old M-B files out of the bankruptcy liquidation and start dunning you all over again. Get some help from the court or an attorney or both.

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