What does it really mean when a creditor writes off a debt?
lola asked:
When a creditor listed on your credit report list a bad debt as being written off by the bank does it mean the obvious? Is that debt being written off as a loss to the bank? Please answer only if you work, or have knowledge in this field, or if this has happened to you. No guesses please.
When a creditor listed on your credit report list a bad debt as being written off by the bank does it mean the obvious? Is that debt being written off as a loss to the bank? Please answer only if you work, or have knowledge in this field, or if this has happened to you. No guesses please.
Tags: Bad Debt, Credit Debt, Credit Report
November 26th, 2009 at 5:02 am
That is very bad news for you. It means that the creditor has cancelled your debt because they think that they will not be getting any more money from you. They will contact the credit bureau about this which will cause your credit score to be low (very bad if you plan on applying for loans or credit).
November 29th, 2009 at 12:18 pm
A charge off or write off (pretty much same thing) is done for the creditors internal accounting procedures and does not release your obligation to pay a debt nor does it prohibit the creditor from further attempts to collect the debt, send the account to a collections agency, or sell it to a debt purchaser.
Debt forgiveness occurs when the creditor issues a 1099-c releasing the debtor from the debt and the creditor can no longer legally collect the debt. When a 1099-c is issued, the debtor must include the amount as income when filing their taxes except for primary residence home mortgages due to the Debt Forgiveness Act of 2007.
December 1st, 2009 at 5:42 pm
It means the creditor has given up trying to collect from you and has sold your debt for pennies on the dollar to a collection agency who will then begin the process of trying to get money out of you.