Sunday, June 21, 2020

"Charged Off" - don't get so excited - Bankruptcy

mage courtesy of Stuart Miles at FreeDigitalPhotos.net
As we exit this Covid-19 crisis and start back to work, many people are going to find they are further behind on their debts than they realize. They will try to work it out but, in the end, will not be able to make it. As a result, they will be forced to stop paying the monthly credit card and loan payments.

After a period of non-payment, many debtors will receive notices their debt has been "charged off."  The bank or credit card company is telling the IRS the debt is uncollectible. This is for the benefit of the bank or creditor. It allows the creditors to write the bad debt off as a business expense. This doesn't mean you are released from the debt. This is a common misconception I have found during my conversations with clients. The debt remains due and most likely will be transferred or sold to debt collection agency or debt buyer. 

It usually takes months of non-payment before a creditor charges off a debt. But keep in mind, many people are in months of forbearance already. My guess, just my personal opinion, is the creditors will carry the debt through through 2020 because they have enough losses already for this year. 

So, if you are one of those people who find a notice like this in your mailbox that states your debt has been charged off, know that the notice does not end your responsibility to pay the debt. It is probably just the beginning of a new chapter to the life of your debt.

If you want assistance, legal representation, or just want to know more about me, Mark M. Medvesky, or Wells, Hoffman, Holloway & Medvesky LLP, check out our website at www.whhmlaw.com.

We are working with clients via telephone, internet and video conferencing during this time. We are starting to accept office appointments as well. 

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#bankruptcy #Chapter_7 #Chapter_13 #Montgomery_County #law_firm #Bucks_County #Pennsylvania

1 comment:

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