Information on Charge-Offs on a Credit Report

If ignored, credit card and medical debt result in a charge-off. Charge-offs have serious consequences for your credit score. In addition, the IRS will require you to pay taxes on the charged-off amount.

The Facts

Charge-offs are the result of nonpayment. The higher your credit score is prior to the charge-off, the more points you will lose after the charge-off occurs.

Time Frame

Charge-offs typically occur after 180 days pass without a payment's being made. A charge-off will remain on your credit report for seven years.

Function

A debt must be charged off by the creditor so that the creditor is able to claim the debt as a tax loss.

Prevention

A charge-off can be avoided by working out a payment plan or settlement with your creditor.

Effects

Charged-off debts are often sold to collection agencies, which report their ownership of the debt to credit bureaus, further damaging your credit score.

Warning

A collection agency may sue you to recover the balance of a charged-off debt.

Read More

How to Get Credit Card Companies to Stop Calling You At Work

It's happened to many people: You're at work, minding your own business, when all of a sudden, your boss tells you that you've got a phone call ... and it's your credit-card company. It's embarrassing and awkward, and you'd like it to stop. Here are some ways you can prevent this from happening.

Instructions

1

Send a request, in writing, to the credit-card company. Let them know that this number is your work number, and that you do not wish to receive phone calls there. Be sure to include an alternate phone number where you can be reached.

2

Opt out of extra marketing. Because you have a prior relationship with the credit-card company, the Do Not Call registry does not apply here. Sometimes, credit-card companies will call customers not to collect a debt, but simply to let them know about some special promotion they have going on. It's usually a sales call that alerts you to a special interest rate or other program they have available. Call customer service and find out if you can opt out of these phone calls.

3

Change your contact information. Credit-card companies want to have a number where they can reach you, or at least leave you a message, during the day. If your credit-card company has a website, go online and see what contact information is listed for your account. Update your phone numbers so the number they call during the day is not your work number.

4

Pay your bills on time. The most common reason for a credit-card company to call you is because you've missed a payment. If you pay your bills on time, they'll have no reason to call you at all.

Read More

Paid in Full Agreements

Debt collectors commonly agree to settle a debt by accepting a partial payment rather than going to court to try to collect the entire debt. If you have such a paid in full agreement with a creditor, send him a letter with your final payment stating that you have paid the debt in full. This letter proves that you settled the debt in case there is any question later.

Purpose

A paid in full letter informs your creditor that you have completely paid off your debt according to your debt settlement agreement. The creditor then must send you a written notice confirming that you have settled the account and no longer owe anything to the creditor. Once the creditor sends this letter, it releases you from any further liability for the debt even if you have not paid the full amount you originally owed.

Debtor's Responsibility

It is your responsibility to send the paid in full letter when you send your final payment, especially if you are following a debt settlement agreement rather than paying off a debt in full. If you do not send such a letter, the creditor can contact you again to collect the rest of the debt and you will not have any proof that you paid off the debt in full.

Fees and Interest Charges

The creditor cannot charge you fees and interest charges after you have sent your final payment and the paid in full letter. If the creditor attempts to do so, refer him to the paid in full letter. If he reports you to the credit bureaus or sends you a collection letter for the fees and interests, you can use your paid in full letter to dispute the debt.

Alternative

Rather than asking the creditor to send you written confirmation that you paid the debt in full, you can send your paid in full letter return receipt. If you do this, your receipt showing that the creditor received the letter serves as proof that you paid the debt in full. The creditor then cannot attempt to collect the rest of the debt from you even if he does not send you a written response to the letter.

Read More

Debtor-Creditor Laws in Ohio

Actions to collect a debt involve a creditor (the person seeking payment) and the debtor (the person owing the debt). Each state has its own laws that govern creditor-debtor actions. State laws vary. Creditor-debtor actions in Ohio must take into consideration specifics such as the usury limit and the statute of limitations.

Debt Collection Actions

In Ohio, as in other states, the Fair Debt Collection Practices Act (FDCPA) governs collection actions. In general, this act prevents creditors from harassing debtors into paying a debt. If a creditor sues you, Ohio law contains some protections. According to the Ohio Legal Services website, debtors may protect up to $3,225 for a car or up to $1,075 in personal property. While you may be able to protect your car or personal property up to the exemption amount, creditors may pursue other collection methods, such as wage garnishment.

Usury Laws

Usury laws prevent certain lenders from charging an illegal interest rate on loans. In general, the laws primarily affect private loans between individuals. In Ohio, it is illegal to charge an annual interest rate greater than 8 percent. According to JRank.org, a legal information website, Ohio courts may apply the excess interest paid to the principal on the loan.

Statutes of Limitation

Like other lawsuits, debtor-creditor actions have a statute of limitation. The statute of limitation is a deadline for bringing a valid lawsuit. In Ohio, two limitation periods apply. Debts based on a written contract have a 15-year statute of limitation. Oral contracts and actions for debt on account (such as a credit card debt) have a six-year statute of limitation.

Other Issues

Despite Ohio's usury limits, consumers may notice a higher interest rate on certain debts, such as credit card debts. Usury laws allow certain agencies, such as credit card companies, to use the usury laws in the state where the business has its principal office. Companies may incorporate in states that have a higher usury limit than Ohio; this enables the company to charge a higher rate. Because of the legal nature of debtor-creditor actions, readers should consult an attorney before proceeding.

Read More

Can a Bank Get a Judgment on a Charge-Off Account?

A charge-off and a judgment are completely separate concepts; one is an accounting function with the ability to negatively impact a consumer's credit score and the other is a powerful legal instrument with negative effects that reach beyond credit scores to personal property. When a bank charges off a credit account, it does not impact its ability to get a judgment on that account.

What is a Charge-Off?

A charge-off is an accounting entry that banks and other creditors are required to make when a credit account is in default. The accounting entry moves the outstanding balance from the assets category into the bad debt, or loss, category, meaning that the bank does not believe that it will collect what is owed on the account. Charged-off accounts also provide a tax write-off for the bank or creditor, but do not negate the borrower's repayment responsibility.

What is a Judgment?

A judgment is a court-ordered ruling that provides the bank, creditor or third-party collection agency with the legal means to force collection of a delinquent account. Even if the bank reports the account as a charge-off, it is within its legal rights to pursue a judgment. Many banks and original creditors sell charge-off accounts to debt buyers or debt collection agencies. If the original credit agreement, signed by the borrower, includes a clause stating that the borrower agrees to pay the bank or its assigns, then the third-party collector also has the right to pursue a judgment.

Impacts of a Charge-Off

Banks and original creditors often report charge-off accounts to all three credit bureaus. These accounts are negative listings on the borrower's credit report and can seriously impact the borrower's ability to qualify for credit cards, mortgages and other installment loans. Charge-off accounts that are sold to third-party collectors may also appear as separate 'collection' entries on a credit report, further impacting the borrower's credit score. These negative entries can legally remain on the credit report for up to seven years.

Impacts of a Judgment

Judgments are one of the most negative entries a consumer can have on a credit report. Judgments remain in effect and listed on the report for at least seven years, but may remain as long as 20 years. Each state determines the timeframe for judgments; some states allow judgments to be renewed. In addition to ruining a consumer's credit, judgments are legal instruments by which banks and third-party collectors enforce account collection. Many judgments are automatic real property liens, some states require additional legal maneuvering before a judgment becomes a lien. In addition to property liens, judgments may give the bank or collector the power to levy bank accounts and seize personal property such as vehicles and household furnishings.

Read More

How To Get Debt Relief for Payday Loans Without Going Into More Debt

Paying off high-interest debt requires a proactive approach. By taking the time to calculate your debt and understand your options, you will be able to make educated decisions that will work to your benefit. Don't be afraid to ask for help, lower rates or a payment plan.

Instructions

Calculate Your Debt and Research Your Options

1

Calculate your total amount of debt, how much interest you are paying, and how much you can reasonably spend per month on your debt without increasing your debt. Use an online debt calculator like BankRate.com (see Resources).

2

Research debt-consolidation companies. Consider major banks, the companies you currently use, and other companies that offer consolidation. Conduct your research by visiting the company's website, calling its offices or visiting one of its storefronts. When researching, compare rates and loan terms. BankRate.com offers a loan repayment calculator (see Resources). This will calculate how much interest you will pay and how long it will take until payoff.

3

Don't be afraid to call companies and ask for them to explain their options. Make sure you understand the different types of percentage rates; this is important when comparing companies, and it can be detrimental to your negotiations if you don't understand the jargon.

Contact Your Payday Loan Company

4

Negotiate with the company for a reduced rate. These companies want you to pay off your loan, so let them know that you want to honor your agreement but are struggling. It is best to contact the company before you default; they will be more likely to help you out because you are being proactive. This is also relevant for any type of debt you have, including credit cards. Most of the time, all you have to do is ask, and you can have a lower rate, increased credit line or a different payment date.

5

Ask if the company offers consolidation plans. Some companies may not, but if they do, you may be able to put all of your debts together to have one payment per month, a lower rate and a new pay schedule that may offer a lower payment overall.

6

Also compare their consolidation plans to your research; you may be able to negotiate a better offer. Loan companies prefer payment plans over payoffs because they make them more money, so use your research and negotiation skills.

Read More

What Happens if My Co-signer Files for Bankruptcy?

If you cannot qualify for a loan on your own, a loved one can use his income or credit history to "vouch" for you to the lender. The lender then bases its lending decision at least partially on the cosigner's qualifications. Should you default on repayment, the lender may then legally pursue your cosigner. The financial consequences are markedly less for the primary borrower should her cosigner file for bankruptcy than they would be for the cosigner if the borrower filed for bankruptcy.

Cosigner Bankruptcy

If you were to file bankruptcy, your cosigner could be held liable for paying off the remainder that you owe to the lender. Your cosigner's bankruptcy petition, however, does not directly affect you provided you continue making payments to the lender. Because you are already responsible for paying the debt, the lender does not need to take additional collection action against you as the result of your cosigner's bankruptcy.

Effects

Once the court discharges your cosigner's bankruptcy petition, your lender loses the right to demand payment from your cosigner should you stop making payments. The lender's only recourse if you default is to repossess any collateral you used to qualify for the loan or sue you and attempt to collect the debt through garnishment or liens.

Credit Impact

When your cosigner files for bankruptcy, the credit bureaus include a record of the bankruptcy on his credit report. Your lender reports the loan's status on both your credit report and your cosigner's. When your cosigner lists the lender as a creditor in her bankruptcy case, your credit report may reflect the fact that the loan was included in a bankruptcy proceeding. Provided you do not file bankruptcy yourself, this notation does not affect your credit rating.

Warning

Bankruptcy severely injures the petitioner's credit rating. While a consumer can repair her damaged credit over time, the Fair Credit Reporting Act permits the credit bureaus to leave a bankruptcy on the petitioner's credit files for up to 10 years. The bankruptcy will drop your cosigner's credit score. A low credit score coupled with a bankruptcy notation may render the individual unable to help you if you need a cosigner again in the near future.

Considerations

A typical debtor/cosigner relationship exists when the cosigner's sole role is helping the borrower qualify for a loan. The borrower makes payments to the lender with the cosigner only taking on payments should the borrower be unable or unwilling to do so. If your cosigning relationship is one in which you and your cosigner share a joint debt and each contribute equal payments on the account, your cosigner's bankruptcy will affect you the same way a borrower's bankruptcy would affect a traditional cosigner.

If your cosigner files Chapter 7 bankruptcy, you are responsible for repaying the debt in full. If your cosigner files Chapter 13 bankruptcy, she can continue paying your shared creditor via a repayment plan provided the bankruptcy trustee approved the plan.

Read More