Charge Off consequences

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antipode12
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Charge Off consequences

Postby antipode12 » Wed Aug 13, 2014 3:48 pm

Hi - After racking up sizable debt with my ex-fiancee (she: sometimes co-applicant, sometimes authorized user, sometimes just a mooch), we have separated. She refused to contribute $ after the split, so I paid the minimums for as long as I could. (I paid 10s of thousands - she paid zero.)

Since then, the accounts have been unpaid, and now list on the credit report as "charged off".

I have several questions that I hope you can help with.

1) Does the charge-off disappear from the credit report after 7 years if it remains unpaid? (Or does it renew the 7 year window each month?)

2) Does "charge-off" mean that the bank no longer holds the debt? (And that a Collection Agency does?)

3) What is the likelihood in this financial climate that I am sued for the debt? (Can I ride out the 7 years?)

4) Can I refer the Collection Agencies to my ex-fiancee? (They don't seem to have her new phone or address.)

5) Would referring my ex-fiancee to the Collection Agency "re-start" the 7-year window?

6) If I settle with the Collection Agencies for a lesser sum, does that benefit my credit? Is there any other benefit?

7) Any other ideas? What would you do?

Thanks a ton!


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djrez4
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Postby djrez4 » Wed Aug 13, 2014 5:28 pm

antipode12 wrote:1) Does the charge-off disappear from the credit report after 7 years if it remains unpaid? (Or does it renew the 7 year window each month?)


7 years from date of first delinquency. CRAs can take 6 months to delete from there. Charge-off does not renew the period every month.

antipode12 wrote:2) Does "charge-off" mean that the bank no longer holds the debt? (And that a Collection Agency does?)


Charge-off is an accounting term meaning the bank has determined that it will not recover the debt. It may remain with the bank or it may move to a collection agency.

antipode12 wrote:3) What is the likelihood in this financial climate that I am sued for the debt? (Can I ride out the 7 years?)


Depends on the creditor and the amount.

antipode12 wrote:4) Can I refer the Collection Agencies to my ex-fiancee? (They don't seem to have her new phone or address.)


You can try, if she is responsible for the debt. She would be as a co-applicant, not as an authorized user, and not as a mooch.

antipode12 wrote:5) Would referring my ex-fiancee to the Collection Agency "re-start" the 7-year window?


No.

antipode12 wrote:6) If I settle with the Collection Agencies for a lesser sum, does that benefit my credit? Is there any other benefit?


Depends. If you reach an agreement called a pay-for-delete and the creditors delete the accounts from your reports in exchange for payment, it will help your credit.

Otherwise, the account status may change from Charge-off to settled for less than full amount. That doesn't help much.

antipode12 wrote:7) Any other ideas? What would you do?


Sue the ex?
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antipode12
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Postby antipode12 » Thu Aug 14, 2014 10:20 am

Thanks for the response.

---
Quote Originally Posted by antipode12
4) Can I refer the Collection Agencies to my ex-fiancee? (They don't seem to have her new phone or address.)
You can try, if she is responsible for the debt. She would be as a co-applicant, not as an authorized user, and not as a mooch.
---

In regards to this, when you say "try," what concern is there? Would the CA choose to ignore her? (Her credit report lists these debts also.)

Other question, could my ex be able to pay off the debts to the Collection Agencies if she is only an Authorized User?

Thanks again!

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Postby djrez4 » Thu Aug 14, 2014 12:55 pm

I mean the CA may say, "OK thanks!" and choose to ignore it or they may go after her as well. If they can collect from the ex, you're off the hook.

She can pay off whatever she wants. The CA doesn't care where money comes from.
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Postby CarefulBuilder14 » Thu Aug 14, 2014 3:30 pm

Keep in mind that the ex has a history of being unreliable when it comes to money, and she's not legally liable for several of the accounts. She legally can pay, yes, but history suggests she won't.

If she agrees with you that she will pay X, Y and Z, then it might be safer to have her give you the right amount in cash, and then you use it to make sure the debts get paid. Then you know she's not just making some promise to have you go away for another month.

Although she might need to use credit that is only in her name to pay off existing debt in your name / both your names. She might not have the cash and would need to do something like a balance transfer.
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Postby antipode12 » Thu Aug 14, 2014 11:52 pm

One further question: the credit report reads as follows:

Status: Account charged off. $5,289 written off. $5,289 past due as of Jul 2014.
Status Details: This account is scheduled to continue on record until Jan 2019.


Does this mean that it leaves my credit report in 2019? Or is it 7 years from 2014 --> 2021?

(fwiw, I sued my ex, and in court, the judge believed her defense that I promised her she would never have to contribute to the debt, and the judge asserted that a couple determines who owes what percentage of a debt. In this case, he said she did not have any explicit obligation to pay any more than 0%. I was stupefied.)

-----


So, how's this for a plan?

A) I contact Credit Collectors and provide them with ex's contact info, in hopes that it pressures her to make some payment.

B) I sit and wait, and hope that I do not get sued over the next 7 years.

C) If I do get sued, I can then negotiate to pay the debt at a discount. (Hopefully, a deep one by then.)

D) When the resulting 1099-c is filed, I will declare insolvency in order to avoid being charged for it.

E) In all cases, my credit is equally ruined.

What do you think?

antipode12
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Postby antipode12 » Mon Aug 18, 2014 1:16 am

Is it better for me to negotiate with Debt Collectors now, or in few years if/when they decide to bring a suit?

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Postby djrez4 » Mon Aug 18, 2014 9:40 am

antipode12 wrote:Does this mean that it leaves my credit report in 2019? Or is it 7 years from 2014 --> 2021?


As I said above, date of first delinquency. Sounds like you went 30 days late back in 2012.

antipode12 wrote:(fwiw, I sued my ex, and in court, the judge believed her defense that I promised her she would never have to contribute to the debt, and the judge asserted that a couple determines who owes what percentage of a debt. In this case, he said she did not have any explicit obligation to pay any more than 0%. I was stupefied.)


Not surprised. You had nothing on paper and were the main account holder.

antipode12 wrote:So, how's this for a plan?

A) I contact Credit Collectors and provide them with ex's contact info, in hopes that it pressures her to make some payment.


No harm there.

antipode12 wrote:B) I sit and wait, and hope that I do not get sued over the next 7 years.


Or, you could try to pay off the debt you incurred. The costs of your delinquency are figured into the interest rates and annual fees of every other cardholder. I don't particularly enjoy paying for your mistakes. (Any more than Member enjoys bailing out the banks.)

antipode12 wrote:C) If I do get sued, I can then negotiate to pay the debt at a discount. (Hopefully, a deep one by then.)


Don't count on it. If it was me representing the creditor, I'd get a judgment for the $5300, plus costs. That creates a new item on your credit report that lasts for another 7 years - to 2021 at this point. And, depending on your state, the judgment itself can last anywhere from 6 years to forever.

antipode12 wrote:D) When the resulting 1099-c is filed, I will declare insolvency in order to avoid being charged for it.


Now, you're just being a complete deadbeat. So, now I have to pay for your delinquency and for your taxes?

antipode12 wrote:E) In all cases, my credit is equally ruined.


Mission accomplished.

antipode12 wrote:What do you think?


I think you should suck it up, deal with the fact that you made a financial error, and figure out how to pay back the money you owe. I'm ok paying my fees and taxes to take care of people in unfortunate circumstances. You created your own mess and are now weaseling out of it. That's complete bullsh!t.
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Postby antipode12 » Mon Aug 18, 2014 12:12 pm

djrez4 wrote:You created your own mess and are now weaseling out of it. That's complete bullsh!t.


I thank you for the technical insights, but ask that you leave the sanctimony to yourself. It's an argument you would lose, for certain.

Suffice it to say that the banks make record profits every year, so any "cost" that trickles to you is not borne of necessity, but of abuse. Besides, I paid so much in additional interest (just holding the the debt in check) over the years that the banks made more money off of me than they ever do off of you.

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Postby yfan » Mon Aug 18, 2014 12:16 pm

djrez4 wrote:Or, you could try to pay off the debt you incurred. The costs of your delinquency are figured into the interest rates and annual fees of every other cardholder. I don't particularly enjoy paying for your mistakes. (Any more than Member enjoys bailing out the banks.)

I have to completely disagree. For one thing, paying off a debt that is already charged off will have zero impact on the probability that banks believe one will become delinquent (anyone), and thus zero impact on interest rates and annual fees they charge other cardholders. There is absolutely no reason to pay a debt that is already charged off, unless the creditor agrees to take the delinquency off the credit reports.

djrez4 wrote:Don't count on it. If it was me representing the creditor, I'd get a judgment for the $5300, plus costs. That creates a new item on your credit report that lasts for another 7 years - to 2021 at this point. And, depending on your state, the judgment itself can last anywhere from 6 years to forever.

And what exactly would your law firm's cut be on a mere judgment of $5300? Probably not enough to pay all the hours even the legal aides will spend on the suit. Even if you got costs, a 40% cut of that $5300 would hardly be considered worth the trouble by most law firms of repute or lawyers of repute. Sure, you can try to ruin someone else's credit forever, but they would still have the option to file bankruptcy and go through a bankruptcy court. In the end though, making an example of a small fish like that will gain a creditor nothing, and in fact can net them some significant PR headache if the local media decides to pick up a story of a heartbroken debtor in distress who is now being doubly screwed by their bank for a mere five grand, AFTER the debtor already paid 10s of thousands.

djrez4 wrote:I think you should suck it up, deal with the fact that you made a financial error, and figure out how to pay back the money you owe. I'm ok paying my fees and taxes to take care of people in unfortunate circumstances. You created your own mess and are now weaseling out of it. That's complete bullsh!t.

I don't think so. The OP mentioned that he made payments as long as he could - so I am guessing his inability to pay further is a result of circumstances and not lack of willingness to pay.

I understand the concern about everyone's rates going up when there are a few people that don't pay their bills. But frankly, that problem is more the banks' making than the debtors', speaking on a large scale. If banks work with people in hard times and work out plans to pay what they can instead of always demanding every penny, there would in fact be less delinquencies and fewer bankruptcies. That's where the fire, so to speak, should be focused.



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