Can I Be Sued if a Creditor Has Written Debt Off?

The longer you go without paying back your debts, the worse your consequences become. If you fall far enough behind on your debts, your creditors may end up suing you for repayment. The timing of any lawsuit is at the discretion of the creditor and can vary widely. However, even after a debt is written off, your creditors can still sue you.

Debt Write-Off

As a debtor, a debt write-off sounds like something positive, as if you would no longer be responsible for paying back your debt. Unfortunately, a write-off, also known as a charge-off, is simply an accounting entry by your creditor. By writing off your debt as uncollectible, your creditor is entitled to a tax benefit. However, you receive no such benefit and are still liable for your debt. Continue nonpayment will often result in a lawsuit against you.

Lawsuits and Judgments

A creditor will normally try to avoid filing a lawsuit if there is any hope of your voluntarily paying back your debt, since a lawsuit costs the firm money. However, by the time a creditor writes off a debt, it is essentially acknowledging that you will probably never repay your debt except by force. In this case, filing a lawsuit may be the company's last resort to get money out of you, since a lawsuit can result in an enforceable judgment against you.

Consequences

The consequences of a lawsuit and a judgment are severe. A judgment essentially provides your creditor with the backing of the court in terms of directly collecting money from you. With a valid judgment, your creditor can place a lien against your property, garnish your wages or levy your bank account, subject to the debtor protection laws in your state. Your creditor can collect money from you up to the total amount of the written-off debt, plus interest.

Bankruptcy

The final defense to a judgment after a credit card charge-off is often bankruptcy. Since credit card debt is typically dischargeable in bankruptcy, you should be able to file bankruptcy and block any judgments against you. As soon as you file, your creditor loses the right to enforce the judgment due to the automatic stay.