When a debt or asset is charged off, the creditor removes the unpaid account from their balance sheet using an IRS rule called “Specific Charge-Off Method”. The debt is typically more then 180 days past due, and since it is unlikely to be paid in the near future, this rule is used to adjust the books removing it from current assets.
Quite often, creditors sell charged off accounts they deem worthless to third party debt collection agencies called Junk Debt Buyers.
Charged off debts are still collectible…even years later, take these steps
When creditors sell an account, they sell all rights to the account as well. Only the new legal owner of the account can collect the debt. Once a company decides to charge off a debt they are required to report that information to a credit bureau within 90 days of the debt’s charged off date.
Delinquent debt accounts are bought and sold frequently so your old account might end up in the hands of a dozen different debt collectors over the course of several years. This explains why you receive out-of-the-blue calls from debt collectors demanding payment on an old forgotten debt.
If you receive collection calls or letters on charged off debts that you have already paid off, before or after the charge-off, then immediately dispute the debt in writing using this free sample letter Previously Paid Debt Letter.
If you believe you are a victim of illegal or unfair debt collection practices, submit your information to a FREE* Fair Debt Lawyer.
The debt collector may just be liable to you for statutory damages of up to $1,000, plus any actual damages suffered, plus attorney fees!