Cancelled Debt
Date: Wed, 01/30/2008 - 06:09
Cancelled debt is another term for charge off. Simple accountin
Cancelled debt is another term for charge off. Simple accounting term for profit/loss write off. Wishful thinking that the term refers to deleting. Cancelled just means that the account is canelled and collections will begin
Cancelled debt and charged off debt technically mean different t
Cancelled debt and charged off debt technically mean different things.
"Charged off" is an accounting term meaning the debt was charged against a company's loss reserve. A chargeoff balance is still owed and can be collected on or sold.
"Cancelled" debt is all or a portion of debt that is forgiven; you really don't owe it. For example you might have a $2000 balance on some credit card. You might offer to settle with them for $1500. If they accept your settlement to close the account, then the remaining $500 becomes "cancelled debt" which they cannot try to collect from you.
Any cancellation of debt over $600 is supposed to be reported to the IRS on a 1099-C, and they debtor is required to pay income tax on it.
