Ok here is my question…If some credit cards have been charged-off…what EXACTLY does this mean? What can they leagally do to get the money? And another question I have is can a person join a credit consalidation if they are already charged off, or can they still work with the credit cards?? Any answers to these questions would be greatly appreciated, thanks to my fellow dopers in advance.
They can sue, especially for large balances, but try everything but that becase you could declare bankruptcy instead. They don’t want that, which is why banks fund those credit counseling centers…the want their money (and they deserve it back), so they set up credit counseling centers and help people get back on some payment arrangements.
You can consolidate even bad debts, but since it’s a bad debt, your credit report might limit the amount you can borrow, the terms/length and the interest rate might not be favorable. Usually, it is still best to consolidate and negotiate (always stay in touch with people you owe money). It is always better to be up front and be willing to work things out…for everyone, including you (and me/us who will wind up paying for your bad debt)
It is always better to pay debts, even if they went bad. Paid is much better than just written off debts. Make calls, consolidate if possible and do something.
Do not walk away and do not declare bankruptcy.
Well, to be fair, rather than “don’t declare bankruptcy” perhaps “don’t declare bankruptcy unless there is no reasonable alternative.” There’s nothing inherently wrong with declaring bankruptcy and taking advantage of the protections thereof.
You may want to invest the cost of consultation with an attorney specializing in financial/bankruptcy issues to see what s/he suggests for your specific circumstances.
Sorry Phil- hover it is NOT always better to pay debts. A “deroq” stays on your report for 7 years- after activity stops. So say you have a “charged off” credit card debt, which is on you credit report for 6 years- then you win the Lotto & pay it off- then it stays on your report (as a “paid off derog” which is almost as bad) for another 7 years.
Many credit report contain large glaring errors- you have no responsibility at all fo paying these off (note to all- get a copy of your report every so often, it will contain such errors, and YOU have to fix them). Some grantors are basicly crooks, with illegal interest, charges or balloon payments. Even if you did borrow thw money, you are not legally or morally responsible for such add’l charges.
And as Otto said- bankruptcy is legal, and not immoral- you have a Constitutional right to it.
If you are deeply in debt, and the double charges start piling up (late fee $50, over limit fee - for not paying the late fee- $50, month after month), then maybe bankruptcy is the right thing.
Now, yes sometimes you can negotiate. If they will agree to remove all the bogus charges & fees, and settle for the principal- which is what most credit counseling services go for- then this can be a good thing. But remember, your credit will be bad for 7 years after you pay them off- or for 10 years after you declare bankruptcy (although after 7 years, you are usually OK). So think, and wiegh your options.
Now- as to a “charged off” debt? That means they have given up hope of collecting it themselves. Often, they will sell that debt to a collection agency- which will start calling daily. Almost never will they attempt to take legal action- ie “get a judgement” as judges aren’t very sympathetic to bogus charges.
Since you don’t mention where you are located, I will recommend the Consumer Credit Counseling Service. You can find a local office at www.nfcc.org. These locations are strictly not-for-profit and charge you nothing. They ask that you pay a monthly fee to help cover their costs, but you don’t have to. My hubby is on a debt solver plan through our local CCCS. I believe that he is paying off a credit card balance that had previously been written off. They do so appreciate that!
NEVER EVER EVER use AmeriDebt!! They have been sued for non-payment many times.
Best of luck!
You should only be apologizing because you are misinformed.
If a debt goes to collection in 1998, and you make a payment on it in 2001, the clock that determines the purge date is still ticking with a start date or 1998 (or earlier if a string of delinquencies led to this and was reported). Making payments does not affect the original date of delinquency that goes into calculating a purge date. This is a popular misconception.
I’ll repeat the unpopular “it is always better to pay off a debt” remark. It is. It might not be an option at all times, but it is always the better choice if you have one and can arrange something. If you have a ‘choice’ and choose bankruptcy, you made a poor choice (heck the costs are passed on to someone). Bankruptcy is for someone that has no choice. The OP leads me to believe they have choices, and are looking to pursue one.
As for lawsuits, once you are not talking nickels and dimes, lawsuits do happen. What I’ve seen is an increase in suits against consumers because as banks consolidate and buy eachother up, you might find yourself owing Citibank 15 grand after they suddenly are the owner of all 3 credit cards you maxed out and can’t pay.
Soory Philster, you’re wrong on this. Why should the date it goes to collection be the final date? Why not the date the bill was originally incurred? No, the fact is, credit report companies often list as “late payments” accounts that once went to collection then were paid off years later- and the date of the last payment (which is, of course- “late”) is the date they start as the purge date. When do you think it is that determines the “purge date”?
I know this, as I have seen debts that were FIFTEEN years old on my Experian/Transunion reports. Sure, I did get them taken off, but not without a lot of argle-bargle. Maybe you could be right in that they are not supposed to put debts like that back on your credit history- but they do. And of my three “consumer counseling” reference books I have here- none of them state that going to collections starts the 7 year statute of limitations on debt reporting.
Of course, since credit reports are nearly always significantly wrong, maybe this was just a screw up, but I don’t see how much difference it makes.
I do agree about the “it is better to pay off a debt” but I’d change “always” to “usually”, and put the word “valid” in front of “debt”. Although I do agree bankruptcy should not be entered into lightly, it is better (for both)than simply skipping out on the debts entirely.
quote: DrDeth
"Soory Philster, you’re wrong on this. Why should the date it goes to collection be the final date? Why not the date the bill was originally incurred? No, the fact is, credit report companies often list as “late payments” accounts that once went to collection then were paid off years later- and the date of the last payment (which is, of course- “late”) is the date they start as the purge date. When do you think it is that determines the “purge date”?
DrDeath, you are tallking about errors and/or claimed errors leading to other errors, affecting a minority of people.
Paying a collection does not change the purge date. It doesn’t. Sure, if the collection company reports the wrong date of entry, or doesn’t provide the original date it went sour, then the wrong info is leading to the wrong result.
Fact is, 10-15 million credit reports will be used to grant/decline credit this month. The rate of errors and disputes in response to innacurate data affecting a credit lending decision is way below 1%.
I’m in the industry, I know how many disputes get processed and I see the results.
Sure, even .5% means thousands of disputes, but it is not a widespread issue and the accuracy you speak of is misleading, based on anecdtoal evidence ,and reeks of someone who had a bad experience.
Here we talk about the rule, not the exception. While it can be mentioned (the exception…the freak error that causes actual damages to omeone) we can’t make that the focus, as that would be supporting ignorance.
Purging accounts per the FCRA limits is one of the most efficient and well tested processes in the industry. Paying written off and collection accounts does not create a new activity date for purge calculation purposes. If wrong info is provided, the the wrong calc takes place - of course.
I know this, as I have seen debts that were FIFTEEN years old on my Experian/Transunion reports.
note: the last line of my above post is a frag quote from DrDeth and was posted in error. ‘course’ is the last word of my post above.
Experian’s web site has a lot of good info in their “Ask Max” column about this and other topics. From the column:
Deleting information
Figuring out when negative information is removed from your credit report can be very confusing, and understandably so. I hope this helps.
* Delinquencies (30 – 180 days): Can remain seven years from the date of the initial missed payment.
* Collection accounts: Remain seven years from the date of the initial missed payment that led to the collection (the original delinquency date). When a collection account is paid in full, it will be marked "paid collection" on the credit report.
- Charged-off accounts: Remain seven years from the date of the initial missed payment that led to the charge off (the original delinquency date), even if payments are later made on the charged-off account
There have been 3 studies that I know of about Credit Reporting Agencies. The first is from PIRG (Public Interest Research Group), and the study showed that serious errors (those that would lead to a denial of credit) occured about 29% of the time. Consumer Reports did a similar study, with similar results. Then the Credit Reporting Industry itself commisioned it’s own study- with the results quoted by Philster (who works in that business). Hmm, 3 studies, two by highly respected unbiased independent groups, and one sponsored by the industry itself… which to beleive, which to believe. 
:dubious: :rolleyes:
If memory serves me correctly, over 90% of Credit reports had some sort of error. Many minor, of course. One of the more common errors is info that isn’t yours- I had stuff from my Dad show up for years after his death.
Philster- you’re a great guy, and a font of knowledge, especially on this subject. But don’t you think you might be a teeny bit biased?
Now, thanks to cstamets, I do see that I appear to have been in error about whether or not such info can legally be on your credit report. IMHO- it will be there, legally or not. However, let us put it this way- the “derog” is already there; 7 years from now- whether or not you pay it off- it will go away. Paying it off does not change the fact it is a “derog”- although it could change the type of derog.
Well, now, not to get nit-picky, but this is not the case. Article I, section 8 gives to Congress to power
among other powers. Congress could conceivably outlaw bankruptcy entirely. I am unaware of any case in which declaring bankruptcy has been afforded constitutional protection as a right of the people.
I guess I forgot to hit send on this post this morning. Oh well. Hate to see all that good typing go to waste…
Now, having posted that, I will say that I’ve seen cases on my own credit report where a collection agency has tried to misrepresent the date of the original deliquency in order to keep a debt on the credit report longer than it should be. Disputing the information with the credit bureau, requiring the collection agency to provide documentation for the original date, resulted in the information being deleted. Having your own documentation to back your dispute up with also helps.
A paid derog is slightly better than an unpaid derog. Might not affect a credit score much, but if you’re going to buy a house, everything needs to be paid.
Another benefit of paying off the debt instead of waiting for it to drop off is, once you’ve paid the debt, if you dispute it, the creditor may not care enough anymore to respond. They’ve already got their money. If the creditor doesn’t respond, it comes off your credit report.