She stated that many people are paying old debts that they are no longer legally responsible for paying, including ancient, charged off debts. I’m not a lawyer, so I asked attorney Jacqueline McMickens of Brooklyn, New York, for her views on this matter.
#CHARGED OFF AS BAD DEBT HOW TO#
(Also, for more background info, here’s another article I wrote about the statute of limitations, with an explanation on how to use it to eliminate old debts).īut if you’re worried about what a debt collector can do to you, here are some insights that may help. Read here to learn what the New York-based consumer advocacy group called NEDAP/New Economy Project has to say about this topic. The statute of limitations on other national credit cards (like those issued by Chase, Bank of America, or Discover) is 3 years.The statute of limitations on a department store card is 4 years.However, there are two big exceptions to this: In the State of New York, for example, the statute of limitations on credit card debt is generally 6 years. It really depends on how old the debt is, the type of debt was involved, and even where you live or where the creditor is based. And so it’s not always so clear-cut about whether a consumer still legally owes an old debt. Other experts (myself included) note that there is a statute of limitations in every state that governs old debts. Therefore, they suggest you pay the debt. But it does not remove your legal liability. The charge-off, they note, is mainly for the creditor’s benefit. Some experts state emphatically that you still owe an old debt, even if it’s been charged off. In a nutshell, there is a lot of contrarian advice out there. Nonetheless, I will tell you, in summary, what I told them.
As mentioned the age of your debts nor do I know the state where you reside. I actually did quite a bit of research into this topic recently because a few of my coaching clients were facing dilemmas about what to do about very, very old charged off debts. Unfortunately, there are no universal practices and it is not cut-and-dried about whether a consumer is still liable/legally on the hook to pay a debt that has been charged off. Also, some companies may sell old debts to collection agents. Here are some insights to take into consideration when it comes to paying charged off debts.Ī debt that has been charged off has been “written off” by the original creditor as “uncollectable.” So when a company charges off a debt, the business gets a tax break for this loss.Īfter a charge off, most companies will not try to pursue further collection from a consumer. However, if I were in your shoes I probably would not agree to pay a charged off debt at all – unless I desperately wanted to clean up my credit, and there was an upfront, written agreement to have all negative information about the charged off account removed from my credit reports.Īnd, yes, getting a receipt would absolutely have to be included in any deal, regardless of whether my payment was a partial one or one that paid the balance in full.
#CHARGED OFF AS BAD DEBT FULL#
Q: Should I settle in full on an account that has already been closed or charged off? Or should I demand a paid in full receipt once we have a negotiated amount?Ī: Without knowing the specific type of debt involved, what state you’re in, and how old the debt is, it’s hard for me to give you definitive advice.
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