Internet's first get-out-of-debt community - 134,000 members

Posted: Wed May 24, 2006 7:21 am Subject: What does Charge-off's really mean?

Alrightie...here we go.

What the heck does a charge off really mean? Does it mean that the card will not sue me? Does it mean that they won't sue me but will sell the account off to a third party to try to get a big commission off of the balance? AND does this mean that the third party collector can SUE me and get a JUDGEMENT against me?
I have been told that the original creditor would have to sue me, not the third party and if they charged it off--they are not going to sue me.

ALSO, how long does a company normally wait before charging off? I have some 120 days past due, does that mean they are not going to charge it off?

Posted: Wed May 24, 2006 7:56 am Subject:

A charge off means that the original creditor has sold the debt to a third party - a collection agency. This means the original creditor is probably not going to sue you, BUT the collection agency still can! They have assumed the debt and, provided the statute of limitations has not expired, they have the right to pursue a judgement against you.

If you have a debt 120 days past due, this does NOT mean it won't be charged off. My advice is to make a payment if you can. You do not want the debt charged off. A charge off and resulting collection account will be worse on your credit.

Linda · Posted: Wed May 24, 2006 8:01 am Subject:

dmj210...

I can not make a payment, due to the fact all my payments are currently going towards my debt settlement company.

My debt settlement company said that the third party collection agency could not sue me. Now I am really confused.

So, does collection agencys sue alot over credit cards?

Posted: Wed May 24, 2006 8:31 am Subject:

Third party agencies can and will take it to court, but it varies so much that is it unpredictable. One member here was sued by HSBC, via a 3rd party collector, I was going to be taken to court by a different creditor (via 3rd party collector).

I think I read here in the forum that one part of the charge-off process is that it is a tax write-off for the original creditor. They can use the tax write-off portion to off-set the debt amount, since they usually sell the debt to the collection agency for a percentage of the original balance.

Good luck!

Posted: Wed May 24, 2006 8:49 am Subject:

I was told that my AMEX account was charged off and the collection agency did threaten to litigate me. When I started talking about payment arrangements they said they would have to contact AMEX to see if it was acceptable. If charged off means the account was sold to the agency, then why would they need to contact AMEX about payment arrangments? Are they just lying?

Linda · Posted: Wed May 24, 2006 8:57 am Subject:

Ok, just found out that the debt settlement company told me that it is NOT likely they will sue. They explained it like this:

Third party CA's has a really high turn over of employees and it is really stressful job. They are mostly paid miniumum wage and works on commission. They said that they have such a high rate of people to try to collect from that they tend to go after the people that are not aware of their rights and are not intimidated of them.

They told me that "pay today to prevent further legal actions" was a big difference from a "summons on the door".

Plus, they said it makes a difference if the debtor is enrolled in a debt settlement program or just simply not paying. She said that the CA would much rather get some portion than no portion at all.

I understood her and felt better, however do you all see it this away as well?

Linda · Posted: Wed May 24, 2006 8:59 am Subject:

Oh, yea...

she also said that when the CA's pull your asset information and see that you own nothing that they can have a good reason to fight for...then they most likely will pass you down to someone that does have assets to go for.

Posted: Wed May 24, 2006 10:17 am Subject:

jcrab1, the collection agency can have two different types of relationship with the original creditor: they can be an associated company, sometimes even a department within the original creditor's company, or it could be that the OC sold the acct to the CA.

If it is an associated or in-house collection, even doing business under a different name, then they may refer back to the OC's name for acceptable payment arrangements.

If the OC sold the acct, then it's very unlikely the CA will refer back to them.

For example, Capital One uses allied interstate and NCO as an in-house type yet still third party collector. The computer systems are linked together. The CA will make calls on behalf of Capital One, but they don't "own" the account outright.

Posted: Wed May 24, 2006 10:21 am Subject:

Linda,

I see it the same way as well. To me it seems that the charge-off is a way of getting the acct off the books of the OC, so their books look better.

I remember when I worked for a credit union, they have a contigency fund of a percentage of their assets that they put aside to off-set the charged-off accounts against. We would see the information in the monthly newsletter, with remarks that they set-off XX-amount to the account for charge-offs. Helps balance their books.

Guest · Posted: Wed May 24, 2006 6:02 pm Subject: To: Set4sail

You mentioned NCO above. Do they take people to court? I have a debt placed with them that is very strange. The balance is $318 but the collection fee is $596. How bizarre is that? I do know the courts say "reasonable" collection fees and this is unreasonable. Any insight into NCO would be most helpful. Thanks.

Posted: Thu May 25, 2006 12:49 pm Subject:

Evidence is a must before a legal case is filed. NCO must have the legal documents to prove that the debt is legitimate. Did you dispute the item with a debt verification letter?

Know more about the activities of NCO collection agency in the threads below.

http://www.debtconsolidationcare.com/forums/about6873.html

http://www.debtconsolidationcare.com/forums/nco-finance.html

http://www.debtconsolidationcare.com/forums/nco-ca.html

I never heard NCO having a legal stand against anybody. They usually purchase age old debts and most of them are disputed. If they have reported negatively in your credit file, you must place the item on dispute with the credit bureaus. They will rectify the information if it's incorrect.

Guest · Posted: Mon May 29, 2006 5:44 pm Subject: charge off does not mean acct was sold

The poster who wrote "A charge off means that the original creditor has sold the debt to a third party - a collection agency. This means the original creditor is probably not going to sue you, BUT the collection agency still can!" is mistaken.

An original creditor can charge off an account and still retain the debt and they can still sue you.

They might continue collection efforts in-house. They might farm it out to a collection agency. They might sell it to a junk debt buyer. Only if they sell it do they relinquish their right to continue collection activities, including suing you for the debt.

A charge-off is a bookkeeping practice that allows a company to write the debt off as a loss. In no way does it affect the creditors ability to continue to try to collect or to sue. The only thing preventing that is if and when they sell the debt. Nothing olbigates them to sell the debt. If they do, then the junk debt buyer can pick up where the original creditor left off and pursue collection activities and sue you, if they so have a mind.

Even if the debt is beyond the statute of limitations (SOL) for your state, they can sue you except in a very few states (like Mississippi) where the debt is extinguished once it is beyond the SOL.

If they do sue you and the debt is beyond SOL, you can raise the SOL as a defense, which will get the case dismissed. If you don't do that, they can still get a judgement on you despite the SOL.

It is true that usually junk debt buyers do not have the paperwork to prove the debt but it is up to the consumer to know her rights under the fdcpa and enforce them by demanding legal validation. Unless you do that within 30 days of when a collector contacts you, they can still continue collection activities and they can still sue you.

Read the FTC Cass letter at: www.ftc.gov/os/statutes/fdcpa/letters/cass.htm

It is almost always an arduous process getting a credit report corrected or changed in any fashion. The credit bureaus do not have to delete the trade line of a junk debt buyer like NCO unless you are able to force the hand of the junk debt buyer and make them admit they have no papers and AGREE to delete their trade line.

Guest · Posted: Mon May 29, 2006 6:20 pm Subject:

It seems unfair that the OC can have it both ways...if they charge off as a loss so they get a tax write off, that benefits them. So, if you pay, they have gotten more than they were due. That is just not right.

Anonymous Truth · Posted: Fri Aug 31, 2007 3:37 pm Subject: You "people" make me sick

You people really do blow nuts.

You blame others for you own faults and short comings.

Keep in mind, most people at NCO are just doing a job to pay for their food and families

we have scripts and procedures we need to follow...if we don't, we will lose our jobs!

Every fee is given as per contract you sign.
You think you can just take money and not pay it back, that makes you a thief. Plain and simple .

For wrong numbers, if you yell at me, it's a very good chance your number will get called again.

Threats of a lawyer, hahahaha; I wish I could laugh right at you when you yell "call me again and Im calling the attorney general or the better business bureau..." or any of that other crap. You think I care?!!!

A) We have our own legal department, not a lawyer, but a team of them.

B) As employees, do you think we give a shit? If you do sue our company, we are not responsible for the actions of it. and who really wants to be a debt collect any way.?

So go ahead call who you want...
or play nice and so will we
Twisted Evil

In short,

I don't want to call you!!! So pay your bill, tell the truth about how to find "John" or "Sam",
and help us, we have the same goal.
To stop the calls.

If I have offended you...good!!
That means you have done the things that I hate!!
Knock that shit off!!

God, I wish I could say that on the phone,
and though I don't, you're as sure as shit I'm thinking it, because...
calls are monitered for quality and compliance.

Signed
Yours Sincerely (I say all with Utmost sincerity)

Anonymous Truth