what does a "written off" status mean????

If a lender writes off a bad debt (unrecoverable debt) then he doesn't have the right to pass on this debt to a collection agency for collecting the same because he has already shown this account as non-recoverable for tax purposes and might have also got tax-exemptions. Quote:

Phoenix, I wonder where the information you quote comes from because I would like to read in its entirety. Now I'm not picking on you here, but I think you're wrong.

I think that logic (that writeoffs cannot be collected on because of the tax implications) is merely a misnomer that people hold to be true because 1) they've read it somewhere and 2) they want it to be true. However, I still have yet to read any specific laws that actually make phonix's claim true.

Writeoffs are a direct expense and reduce the overall profit that the company shows on their income statement. I disagree with the statement that "the lender in writing off the principal and interest of your debt has been paid 100% of both principal and interest by his tax deduction yielding a tax savings equal to 100% of your debt."

Keep in mind, writeoffs are tax "deductions" not tax "credits". The lender will not receive 100% of the debt amount in tax savings. Writeoffs affect the bottom line (net profit), and the bottom line is what a company pays tax on. Suppose the going tax rate is 15%. Well a $1000 writeoff really only saves $150 in taxes (That is to say, if the company had not expensed $1000 as a writeoff, their tax liability would have only been increased by $150). And so I disagree that the tax savings is equal to 100% of the debt.

In any case, the argument here is that since a writeoff results in any sort of tax savings, it cannot be collected on. That is not true. Yes, a creditor will receive a tax deduction in the year it was written off. However, a creditor can still attempt to collect on written off accounts. If the creditor is able to collect in subsequent years, then any money they collect on a written off account will be reported as "recovery income". At that point in time, they will pay tax on that recovery income.

Also, many times the term "writeoff" is synonomously used with "chargeoff". Chargeoffs are not a direct expense, rather charged against a loss reserve -- chargeoffs do not affect the income statement, rather the balance sheet.

would that apply to the OP'S two loans.they are not only internet,but unlicensed therefore illegal.would either scenario you or phoenix bought up apply?

Yes, I guess that was getting a bit off the topic, considering.

PDLs that are illegal really should not be trying to collect on it anyway. But that doesn't stop them, does it? I don't think they would be worried about the tax implications even if they did apply (not to mention, they probably don't even file tax returns).

In 1987 I co-sighed a car loan for my son and assumed the loan had been paid off, wrong, Yesterday 6/20/09 22 years later I received a letter from an attorney demanding payment, in all those years I never received a past due notice.
Is the lawer blowing smoke?

For the benefit of all readers, I'd like to explain the terminology being used here, with regard to the write-off and charge-off process and how it affects your credit.

Let's say I have a store credit card that I haven't made payments on in some time. In other words, I have unpaid debt associated with that card. A lender / creditor will try to recoup the payments I owe them for a certain period of time. They will send me letters about the overdue balance, and they will probably turn the account over to a collection agency at some point.

After a few months of trying to get me to pay the debt (and usually at the six-month point), the store will write off the account as bad debt. This is like say, "This person has not paid what they owe, nor do we expect them to at this point. So we will 'eat' the loss." They will then report the bad debt to the credit reporting agencies as a charge-off account. This is when it goes on your credit reports as a negative entry. And since your credit score is based on the information within these reports, this negative item can lower your credit score.

How much it hurts your score depends on several factors, so there's not way I can say exactly. You can be sure your credit will take a hit, though, and you can find out how much by requesting your scores online. By law, negative items such as unpaid debt can stay on your credit report for a period of up to seven years. After that, it must come off.

Keep in mind, also, that a debt write-off and charge-off does not mean the debt is forgiven. You still owe it, and the collection agency and/or the original creditor can still come after you to settle the debt.
http://www.homebuyinginstitute.com/