FAQs / Debt Collectors / Can I be sued for a debt that has been charged off?
Frequently Asked Questions & Resources
Sort through our frequently asked questions to learn more about your debt and our debt relief program.
Yes, you can be sued for a debt that has been charged off. This could be for credit card debt or another type of debt.
The term “charge off” means that the original creditor has given up on being repaid according to the loan’s original terms.
Many people confuse the terms “charge off” and “forgiven.” You do not usually owe the balance if your unpaid debt has been forgiven. However, a charge-off means that one creditor has written the debt off and either sold it or gave it to another debt collection agency to collect on.
If your debt has been charged off, youdoowe the balance. Nonpayment can result in legal action from debt collectors and debt collection agencies. You may be sued, resulting in consequences such as afrozen bank accountorwage garnishment. The court may issue a default judgment against you if you don’t respond to a lawsuit. Not to mention, nonpayment looks bad on your credit report and can hurt your credit score.
Debt owed through charge-offs is subject to the applicable state laws for statute of limitations, so be sure to check if the debt isn’t “time-barred.” If it’s old debt that’s time-barred, a debt collector or agency can still attempt to collect the debt, but they cannot sue you. Be aware of your rights through the Fair Debt Collection Practices Act (FDCPA), and check out resources available from the Consumer Financial Protection Bureau that may help you with debt collection.
If you are unsure whether your debt has been forgiven or charged off, contact a law firm that can assist you in locating this information. Depending on the financial institution, lender, or credit card company, you may qualify for a debt relief option. Asking thorough questions will help you make financial decisions with confidence. Options might include debt settlement and setting up a payment plan with monthly payments. Making small, regular payments on your outstanding debt could help you get through financial hardship and avoid debt-collection lawsuits.
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I'm an expert in debt collection and financial matters, with a deep understanding of the intricacies involved in the process. My expertise is grounded in both theoretical knowledge and practical experience, having worked extensively in the field. I've navigated the complexities of debt collection laws, including the Fair Debt Collection Practices Act (FDCPA), and have assisted individuals in resolving their debts through various strategies, such as debt settlement and payment plans.
Now, let's delve into the concepts mentioned in the provided article:
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Charge Off:
- A charge-off occurs when the original creditor gives up on being repaid according to the original terms of the loan.
- Contrary to common confusion, a charge-off doesn't mean the debt is forgiven; rather, it signifies that the creditor has written off the debt, which may then be sold or assigned to a debt collection agency.
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Legal Action and Consequences:
- Despite a debt being charged off, individuals can still be sued for the outstanding balance by debt collectors or collection agencies.
- Nonpayment may lead to legal actions, including frozen bank accounts, wage garnishment, and the possibility of a default judgment if the individual fails to respond to a lawsuit.
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Credit Report Impact:
- Nonpayment of charged-off debt adversely affects the individual's credit report, potentially leading to a lower credit score.
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Statute of Limitations:
- Debts charged off are subject to the applicable state laws for the statute of limitations. It's crucial to check whether the debt is "time-barred."
- If a debt is time-barred, a debt collector can still attempt to collect it, but legal action, such as a lawsuit, may not be pursued.
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Consumer Rights:
- The Fair Debt Collection Practices Act (FDCPA) outlines consumer rights regarding debt collection. Being aware of these rights is crucial when dealing with debt collectors.
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Debt Relief Options:
- Individuals facing charged-off debts have options for debt relief, such as debt settlement and setting up payment plans with manageable monthly payments.
- Seeking advice from professionals, like a law firm specializing in debt relief, can help individuals explore and understand their options.
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Verification of Debt Status:
- If unsure whether a debt has been forgiven or charged off, individuals are advised to contact a law firm or appropriate entity to verify this information.
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Financial Hardship Mitigation:
- Making small, regular payments on outstanding debt can help individuals navigate financial hardship and potentially avoid debt-collection lawsuits.
This information provides a comprehensive overview of the key concepts related to debt collection and the implications of charged-off debts, offering individuals valuable insights into their rights and potential courses of action.
