credit12

Charged-Off Acct Shows Balance

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Here's what I understand from this webstie about charged off accounts:

 

“A debt that is deemed uncollectable and written off. Also known as a bad debt.”
When a debt is charged–off it does not mean that it goes away. Generally, creditors charge–off an account shortly before or right after sending it to a debt collector. Charged–off means the debt is bad, that the account is no longer open and active.

 

The only negative items on my 3 credit reports are a foreclosure from 5 1/2 years ago.  That's bad enough for a credit report but even worse, it shows up as two seperate credit items on each report because it was an 80/20 loan, meaning two loans for the house.  The 80% loan shows as a $0 balance and foreclosed, but the 20% loan shows as having a $30k balance and wasn't included in the foreclosure.  But even worse, it shows it as also "charged-off" in both the status and the payment history.  I've disputed these before and that's how I got the $0 balance on the 80% loan...but I can't get the $0 balance on the 20% loan no matter how many times I dispute it.

 

I'm just curious, and maybe I'm wrong here...but can a charged off acct also have a balance?  I thought if it was charged off it is no longer open and active...and if it's no longer open and active, how can it still show an open and active current balance of $30k?  It seems like they want to have their cake and eat it too.  Having an active account that looks like I'm late on a $30k balance is really bad, but it hurts my credit score even more because your credit score loses points for every time something negative shows up in the report like, "charge off."  To me, it seems like it should either be one or the other...either the account is charged off or it is a delinquent open account over 120 days late with a balance...but not both as it's a contradiction.

 

How can I get the 3 cra's to either list this credit item as either one or the other, rather than both?  Thank you for any help!

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It won't show a zero balance until they sell it.  Then it will show zero.  The first on the mortgage foreclosed, so the 2nd was left with no collateral, it didn't mean the debt went away unless you went BK and included it.  You still owe the 30k, they just have no recourse to collect it such as foreclosing on the house.  They can still sue you for it and get a judgement, or sell it, and the buyer can sue you for it.  Unless the SOL has passed for a written contract in your state, then you are safe.

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@credit12

 

"Charge off" is an accounting term and does not mean the balance no longer exists.  Even though the account has been charged off, the balance still exists and, unless your card agreement says otherwise, they can still add interest to that balance.

 

If they sell the account to a JDB, then the OC must show a -0- balance.

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It won't show a zero balance until they sell it.  Then it will show zero.  The first on the mortgage foreclosed, so the 2nd was left with no collateral, it didn't mean the debt went away unless you went BK and included it.  You still owe the 30k, they just have no recourse to collect it such as foreclosing on the house.  They can still sue you for it and get a judgement, or sell it, and the buyer can sue you for it.  Unless the SOL has passed for a written contract in your state, then you are safe.

darn, ok...thank you.  Yeah, they can't sue me anymore because the SOL in Florida is 5 years.  The weird thing is that it's been a charge off for half a year already and they haven't sold it yet.  I think maybe the reason they haven't sold it is because they tried to but when the collection agency sent me a notice to collect on this loan, I sent them a Debt Validation letter and they couldn't validate.  They responded to me that they can't validate it right now and will cease collection for now.  I am hoping that they won't be able to validate it down the road but they might...or the OC will try to sell it to another collection agency and I'll send them a debt validation letter as well.  The OC must have bad files where they can't help validate.  I only have a year and a half to when this credit item falls off my credit reports automatically but it hurts me to get a job when it looks like I'm late on a $30k debt and they want to know when I'm going to pay it off...but I can't, and if i send just one payment I know it completely resets the date of last activity and instead of another year and a half, it would fall off in 7 years.

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@credit12

 

"Charge off" is an accounting term and does not mean the balance no longer exists.  Even though the account has been charged off, the balance still exists and, unless your card agreement says otherwise, they can still add interest to that balance.

 

If they sell the account to a JDB, then the OC must show a -0- balance.

Thank you.

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@credit12

 

The SOL is 5 years but they only charged it off a half a year ago?  When was the last time you paid on the account?

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@credit12

 

The SOL is 5 years but they only charged it off a half a year ago?  When was the last time you paid on the account?

That's correct. The last time I paid on this account was June or July of 2008.  The balance is really inflated too because of all the interest and late fees that accrued for so long.

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@credit12

 

Negative entries remain on your CR for 7 to 7.5 years after the date of first delinquency (DOFD).  If your last payment was in 2008, the DOFD was around that time or before.   The entry should fall off your CR some time next year.

 

I can't believe the OC kept it open that long.  If I'm not mistaken, Regulation Z of the Truth in Lending Act requires an account to be charged off 180 days after it becomes delinquent.

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@credit12

 

Negative entries remain on your CR for 7 to 7.5 years after the date of first delinquency (DOFD).  If your last payment was in 2008, the DOFD was around that time or before.   The entry should fall off your CR some time next year.

 

I can't believe the OC kept it open that long.  If I'm not mistaken, Regulation Z of the Truth in Lending Act requires an account to be charged off 180 days after it becomes delinquent.

I think the credit reports are saying it should fall off around September of 2015.  It stinks that it was an open delinquent account for so long.

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