Creditor "write off" and Objections to Chap 7

[bkincali]

I'm wondering what happens if a creditor has "written off" your debt on their accounts, how or if they can still contest your BK? If they've shown that account as a loss and benefited from writing it off can they still contest it and what would be the point?

Is it different if they sell your debt in the junk market as apposed to turning it over to a collection agency? My assumption is that it IS different if that debt has been sold.

thanks much.

[aljohnson007]

My understanding is that as long as you have listed the original creditor, the debt will be discharged. I had many junk collectors citing the original debt, all had different amounts, so I included all. I don't believe you have any big concerns. Perhaps someone else will have better info on bad debt/chargeoffs.

[StartingOver08]

The "charge off" notation is an accounting term. It does not extinguish the debt. Usually the account is charged off right around 180 days past due.

IMO, the benefit to having a charge off for a particular account is the OC would most likely not challenge your BK because you would not have used the account for at least 6 months!

Read this: http://www.************************/...in-bankruptcy/

As to your other question about the difference between selling debt and assigning debt to a CA...I don't think there is a difference in the debt or in the collection of it. Maybe BB2U or one of the others knows if there is a difference.

[bkincali]

This is a very interesting nuance in this process.

It seems to me that if a debt goes to "charge off" status and the creditor takes that loss in their books they are much less likely to hassle with contesting the debt in Chap 7 through an adversarial process.

This could be a completely wrong conclusion on my part. Any pro's on here have particular insight into this point of the process and how that effects their (creditors) view on the chap 7 proceedings and whether they will contest a debt???

The "charge off" notation is an accounting term. It does not extinguish the debt. Usually the account is charged off right around 180 days past due.

IMO, the benefit to having a charge off for a particular account is the OC would most likely not challenge your BK because you would not have used the account for at least 6 months!

Read this: http://www.************************/...in-bankruptcy/

As to your other question about the difference between selling debt and assigning debt to a CA...I don't think there is a difference in the debt or in the collection of it. Maybe BB2U or one of the others knows if there is a difference.

[iv65536]

I'm wondering what happens if a creditor has "written off" your debt on their accounts, how or if they can still contest your BK? If they've shown that account as a loss and benefited from writing it off can they still contest it and what would be the point?

Is it different if they sell your debt in the junk market as apposed to turning it over to a collection agency? My assumption is that it IS different if that debt has been sold.

thanks much.

It is simply how creditors treat debt they believe they will never collect for accounting and tax purposes.

[keepmine]

It seems to me that if a debt goes to "charge off" status and the creditor takes that loss in their books they are much less likely to hassle with contesting the debt in Chap 7 through an adversarial process.

First of all, AP's are pretty rare and chargeoff status has nothing to do with it. The creditor must believe they have a legal basis under the bk code to challenege the dischareability of this particular debt.
FDIC Reg 5000 requires them to chargeoff a deliquent account within 180 days of default. It does not mean they can no longer attempt to collect the account.

[justbroke]

It seems to me that if a debt goes to "charge off" status and the creditor takes that loss in their books they are much less likely to hassle with contesting the debt in Chap 7 through an adversarial process.

This could be a completely wrong conclusion on my part. Any pro's on here have particular insight into this point of the process and how that effects their (creditors) view on the chap 7 proceedings and whether they will contest a debt???

While it is less likely, it does not stop a creditor from exercising their right to sue you within the Bankruptcy process via the Adversary Proceeding (AP)/complaint route. While it has been already mentioned that APs are expensive and most creditors don't even threaten to file one unless they have pretty good evidence, nothing would stop a creditor from filing one in your case... even on a charged off account.

The creditor, having charged off your account, could become interested in your BK filing. The reason is, they can not get to lots of information about you and your finances... relatively inexpensively (via a Rule 2004 examination or just asking for your tax returns). They could find something that they think is fraud and then decide to file a case. While this is highly unlikely, there is no limit to the amount of time that they can go back for fraud. (11 USC 523)

I don't think it's likely though. In 99.99% of cases, a debt that's 180+ days old, is not going to bother you too much, but I have read cases with APs brought for debt that was more than 180 days old. Very rare though. The older the debt gets, the harder it is to prove any wrongdoing by the debtor.