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What to do after an account is charged off?

by Tom
(St Louis Missouri)

The original debt has been charged off but I have not been contacted by mail. What happens if you do not take a settlement offer? What happens if you continually ignore their attempts to collect the debt and pay them nothing?

Comments for
What to do after an account is charged off?

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Sep 15, 2009
 How to handle a charged off debt
by: Gerri

You didn't mention what type of debt it is (credit card?) or the amount. But typically after a debt is charged off the next step is to turn it over to a collection agency. If the collection agency is simply retained to collect the debt, then the settlement offer may have to follow the creditor's guidelines and may not be able to go as low as if the collection agency buys the debt outright.

Your other question is what will happen if you don't pay. As we explain in the book, that depends on the type of debt, the amount, and your state laws. After a period of time when you can't/don't pay, the debt may be turned over to a collection agency or you may be sued.

We don't recommend you ignore your creditors/collection agencies altogether. Doing so leaves them with no option but to sue you.

If you can give us a few more details about your situation (add them as a comment to your original question please) then perhaps we can help point you in the right direction.
Aug 31, 2011
 Wells Fargo Auto Loan
by: Anonymous

Hey,

I co-signed an auto loan for my cousin in 2008 and the car was repossessed a year later. The balance owed after the car got sold was $5,200. The account now shows charged off and their collections department told me they were going to send us to judgment on this if we don't pay 50% of the balance. Will Wells Fargo really send us to court for $5,200 (mostly fees by the way, not actual loan). Or will they send us to collections?

Reply from DebtCollectionAnswers.com:

Legally they can sue you - whether they will or not we can't say. Lenders have been known to sue for amounts that small, so you should take it seriously. You may want to consider getting a a free consultation with a bankruptcy attorney so you can find out what they can and cannot do to collect if they are successful in getting a judgment against you.

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