Charge Off

[antipode12]

NYC, NY

Hi - After racking up sizable debt with my ex-fiancee (she: sometimes co-applicant, sometimes authorized user, sometimes just a mooch), we have separated. She refused to contribute $ after the split, so I paid the minimums for as long as I could. (I paid 10s of thousands - she paid zero.)

Since then, the accounts have been unpaid, and now list on the credit report as "charged off".

I have several questions that I hope you can help with.

1) Does the charge-off disappear from the credit report after 7 years if it remains unpaid? (Or does it renew the 7 year window each month?)

2) Does "charge-off" mean that the bank no longer holds the debt? (And that a Collection Agency does?)

3) What is the likelihood in this financial climate that I am sued for the debt? (Can I ride out the 7 years?)

4) Can I refer the Collection Agencies to my ex-fiancee? (They don't seem to have her new phone or address.)

5) Would referring my ex-fiancee to the Collection Agency "re-start" the 7-year window?

6) If I settle with the Collection Agencies for a lesser sum, does that benefit my credit? Is there any other benefit?

7) Any other ideas? What would you do?

Thanks a ton!

 

[LdiJ]

NYC, NY

Hi - After racking up sizable debt with my ex-fiancee (she: sometimes co-applicant, sometimes authorized user, sometimes just a mooch), we have separated. She refused to contribute $ after the split, so I paid the minimums for as long as I could. (I paid 10s of thousands - she paid zero.)

Since then, the accounts have been unpaid, and now list on the credit report as "charged off".

I have several questions that I hope you can help with.

1) Does the charge-off disappear from the credit report after 7 years if it remains unpaid? (Or does it renew the 7 year window each month?)

It disappears unless a collection agency gets a judgment against you.

2) Does "charge-off" mean that the bank no longer holds the debt? (And that a Collection Agency does?)

Generally yes. However sometimes its just written off entirely.

3) What is the likelihood in this financial climate that I am sued for the debt? (Can I ride out the 7 years?)

Fair decent unless the debt goes beyond the statue of limitations.

4) Can I refer the Collection Agencies to my ex-fiancee? (They don't seem to have her new phone or address.)

You could if her name is also on the debt, but that won't help you any.

5) Would referring my ex-fiancee to the Collection Agency "re-start" the 7-year window?

No

6) If I settle with the Collection Agencies for a lesser sum, does that benefit my credit? Is there any other benefit?

Yes, because that "settles" the debt, the balance cannot be sent to a collections agency therefore it will for sure fall off your credit report in 7 years and you won't get sued. The downside is that they will issue a 1099-c for the balance and you will have to pay taxes on that unless you can prove insolvency.

7) Any other ideas? What would you do?

Thanks a ton!

[/QUOTE]

I would consider whether or not bankruptcy could perhaps be a more viable option.

 

[justalayman]

LdiJ;3286259]It disappears unless a collection agency gets a judgment against you.

a slight correction:

it dissappears...period

a judgment is a separate matter.

Generally yes. However sometimes its just written off entirely.

it means nothing in regards to whether it was sold to a junk debt buyer. You know as well as I that charging off a debt is simply an accounting term used by the creditor to reflect the status for purposes of accounting and taxation. Whether it was sold off to a junk debt buyer is a totally separate matter.

 

[antipode12]

Thanks for the responses!

Regarding the ex, you say it would not help. Why? I thought if she chose to step up and pay them, it would clear me. No?
Would the CA choose to ignore her? (Her credit report lists these debts also.)

Other question, could my ex be able to pay off the debts to the Collection Agencies if she is only an Authorized User?


Sub-question to #6: I'm not sure I understand. Can the Collection Agency sue me? As for 1099-c, can that be forgiven? (As part of this whole disaster, I recently Short Sold my house. Similar 1099-c situation. However, I was told that the IRS would not come after me for the "income" of the resulting deficiency. Is the same not true of CC debt?)

Thanks again!

 

[justalayman]

If the ex is a legally obligated debtor it is still up to the creditor which debtor they chase for the funds. They could go after the ex, you, or the both of you

 

[antipode12]

One further question: the credit report reads as follows:

Status: Account charged off. $5,289 written off. $5,289 past due as of Jul 2014.
Status Details: This account is scheduled to continue on record until Jan 2019.

Does this mean that it leaves my credit report in 2019? Or is it 7 years from 2014 --> 2021?


So, how's this for a plan?

A) I contact Credit Collectors and provide them with ex's contact info, in hopes that it pressures her to make some payment.

B) I sit and wait, and hope that I do not get sued over the next 7 years.

C) If I do get sued, I can then negotiate to pay the debt at a discount. (Hopefully, a deep one by then.)

D) When the resulting 1099-c is filed, I will declare insolvency in order to avoid being charged for it.

E) In all cases, my credit is equally ruined.

What do you think?

 

[FlyingRon]

Specifically, a charge off is an internal accounting thing that the person who is owed the money decides he's unlikely to ever see it. They can then take it as a tax loss. It does not mean that the debt ceases to be collectable (nor that collection activity ceases).

 

[single317dad]

Does this mean that it leaves my credit report in 2019? Or is it 7 years from 2014 --> 2021?

When was the last payment activity on the account? Some time around Jan 2012?

5) Would referring my ex-fiancee to the Collection Agency "re-start" the 7-year window?

Only if she starts paying them.

 

[Zigner]

C) If I do get sued, I can then negotiate to pay the debt at a discount. (Hopefully, a deep one by then.)

D) When the resulting 1099-c is filed, I will declare insolvency in order to avoid being charged for it.

Why would you negotiate anything if you intend to go the BK route? Don't play games.

 

[antipode12]

When was the last payment activity on the account? Some time around Jan 2012?

Yes -- March 2012. Good eye!

 

[antipode12]

Why would you negotiate anything if you intend to go the BK route? Don't play games.

Oh, right.. the term "insolvency" is tricky.

I do NOT plan to declare bankruptcy. "Insolvency" here refers to the 1099-c Debt Cancellation "Income" taxes. As per IRS form 982, I would be considered "insolvent" because liabilities at the time are greater than assets. It just avoids paying tax on the canceled debt. It's not bankruptcy.

 

[bdancer]

When was the last payment activity on the account? Some time around Jan 2012?



Only if she starts paying them.

Payment is a factor is the Statute of Limitations (SOL) to bring lawsuit. It is NOT a factor in the 7 year reporting period. Per the FCRA, derogatory items age off your credit report 7-1/2 years from the date of first deficiency (default). Payment does not restart this clock.

 

[antipode12]

But it *does* restart the SOL clock?

From 0?

For any amount of payment?

What about a settlement where the CA gets what it was asking for?

 

[FlyingRon]

But it *does* restart the SOL clock?

From 0?

For any amount of payment?

What about a settlement where the CA gets what it was asking for?

Yep, paying $1 towards the debt reaffirms it and starts the clock going again.

 

[LdiJ]

But it *does* restart the SOL clock?

From 0?

For any amount of payment?

What about a settlement where the CA gets what it was asking for?

A settlement is a done deal.