What is a Debt Charge-off?
Many people are confused and misled when they see that a debt has been “charged off” by their creditor.
- Do they no longer legally owe the debt?
- Has the creditor given up their right to pursue collection?
- Does this help or hurt their credit?
We are here to help. Our team of debt resolution experts can explain all of your legal options for dealing with “charged off” debt and as well as other bills. We offer free consultations to:
- Complete a comprehensive review of your finances;
- Discuss any pending legal action and methods to stop creditor collections;
- Provide available options for debt resolution;
- Recommend the best solution for long term financial freedom!
Call today to speak to a qualified debt resolution attorney toll free at 866-261-8282 or schedule an appointment online. We offer free phone consultations or in-person meetings at any of our six Michigan offices: Detroit, Southfield, Ann Arbor, Warren, Dearborn and Flint.
Do I Still Legally Owe s Debt that Has Been “Charged Off” by a Creditor?
Yes, a “charge-off” is simply a bookkeeping function for the creditor to move the debt to a “questionable” status. It does not compromise a creditor’s right to collect on the debt or engage legal action to pursue the debt, such as a judgment or wage garnishment. A creditor may also choose to sell “charged-off” debt to a third party debt collection agency to recoup some of their loss. A professional collection agency will likely be more aggressive in trying to pursue collections or other legal actions.
How Long Can A Creditor Collect on a Debt?
Most people are surprised at how long a creditor has to collect on a debt. While there is a statute of limitations, there are exceptions and methods for the creditors to extend collection efforts virtually forever by obtaining a judgment.
Here are the specifics:
- A creditor has up to 6 years (from the date of the last payment made) to collect on the debt, including obtaining a judgment on the debt.
- Even if the statute of limitations has expired on a debt, the creditor can still file a law suit to pursue the debt. If you don’t respond to the lawsuit with the “affirmative defense” that the statute of limitations has expired, the creditor will get a default judgment and can pursue a garnishment.
- A creditor can renew the judgment within that 10 year period for another 10 year increment and can continue to do so until the debt is satisfied or the creditor chooses not to pursue renewing the judgment.
- The judgment runs for a period of 10 years.
- Judgments usually lead to a garnishment:
- 25% of net weekly take home wages
- State income taxes
- Car repossessions
- Bank accounts
Find Peace of Mind Through Debt Resolution
Realizing that your debt could last for decades and that debt collectors can be persistent, we recommend finding a lasting solution now. We find that clients who deal with their debts, versus trying to dodge creditors hoping the problem goes away, enjoy less stress with their finances and a better outlook for improved credit. We help clients through two avenues:
Clean Slate: Chapter 7 Bankruptcy
- By filing for Chapter 7, you will eliminate all unsecured debts including charge-offs, judgments and garnishments.
- You will have court protection from your creditors. This means no calls, no collections and no more threats.
- You will have the opportunity to immediately begin improving your credit by creating new, positive payment histories with creditors (i.e. vehicle payment) and by shedding unwanted debt that was hurting your debt-to-income ratio.
Debt Consolidation: Chapter 13 Bankruptcy
- Filing a Chapter 13 Reorganization will establish immediate protection from your creditors. A Reorganization will offer protection from legal actions such as: Home foreclosure, vehicle repossession, judgments, garnishments, etc.
- The Chapter 13 plan will prioritize your debts, establish a balanced budget and likely reduce what you are required to pay back to unsecured creditors, such as charged-off debt. At the end of the program, whatever balances are left unpaid are legally eliminated with a court discharge.
- The program provides unique debt reduction opportunities, such as:
- Remove a second mortgage or home equity loan;
- Lower payment on a vehicle loan;
- Reduce principal mortgage balance on rental property(s).
Trust our Experience in Michigan Bankruptcy Law
For over a decade, Acclaim Legal Services has helped our clients find the path to financial freedom and success. It can feel overwhelming to face mounting debt obligations. We are here to help, and ready to put our experience to work for you!
We offer free in-office or phone consultations to review your personal circumstances, analyze your situation and advise you on the best course of action. We specialize in bankruptcy law, debt resolution, foreclosure prevention and credit repair. We have offices in Detroit, Southfield, Dearborn, Flint, Ann Arbor and Warren, Michigan. Please call us toll free at 866-261-8282 or schedule a consultation online right now.