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Can they do this.


creditrookie
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Yep...fraid so. You'll find lots of discussions about this all over the board here, but the short version is...

A "charge off" is just an accounting term that means "charge against accrued income" for IRS purposes. They can continue to carry it on their books for 2, 3, or 7 years depending on their accounting practices and charge your penalties and interest the whole time.

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Willing is right. It's just an accounting term. Debts you owe to the creditor go on their books as an asset. Once they do a charge off, which is short-hand for "Charged to profit and loss," they no longer consider your debt an asset, but as a loss. The rules on when they must do this are defined by the government's accounting rules. For example, the rules say a credit card account must be charged off by the creditor if it has been delinquent with no payments for 180 cumulative days.

My post with the rules* I found is located here: http://debt-consolidation-credit-repair-service.com/phpBB2/viewtopic.php?t=31671

Wether or not they can continue to charge interest is debatable. Once charged off as a loss, the account is legally defined as closed. I'm not really certain they can continue to post debits to a closed account. Technically, they are supposed to file suit and pursue a statutory interest rate on a judgment to continue charging interest, but we know that doesn't happen that way. I've been unable to find any references in the accounting rules to the legality of continuing to post debits to a closed account. That's a pretty gray area.

*Includes info on re-aging, too.

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