Collection - charge off questions

[mscru28]

Hello All:

I have a friend considering filing a Chapter 7 BK. She has a old auto loan collection account on her credit report. However, the account is listed on her credit report under "Closed Account" and states:

Balance Date: 3/2012
Account Status = "Collections"
Comments: Last reported Delinquencies 11/2005 -- Charged Off Account - Auto

I am concern about the balance date of 3/2012, does this mean she still owes this account and they are reporting, even though it is listed under "Closed Accounts" on her credit report. If so, should she include it in a Chapter 7 BK? Any help would be greatly appreciated.

[JessMN]

Charged off doesn't mean they forgave the debt - so yes, if she hasn't paid it off she still owes it and should include it on her filing.

[DYLAN150]

How can you tell if they forgave the debt on the credit report? Would the balancing owing be zero?

[bcohen]

Just because the credit report shows a zero balance owed does not mean the debt was forgiven. It may have been sold to a junk debt buyer (for pennies on the dollar, of course) in which case the original lender will report a zero balance since the debt is no longer owed to them. The only way you know the debt was forgiven is if you receive a letter from the lender indicating such, or a 1099C tax form, showing the forgiven debt as "income".

[Bell30656]

Put EVERY debt on your filing, that means every single person you owe or even think that you owe. Better to have someone you don't owe on the filing than someone that you actually owe not being on it.