What Does Charged Off Debt Mean?
You may have noticed on your credit report that a debt is labeled charged off, and you are wondering if you are still obligated to pay or if a creditor can still legally make collection attempts. The short answer is yes. You are likely still legally obligated to pay provided the debt is within the applicable statute of limitations for legal collection.
A charge-off simply means that a creditor has deemed the account uncollectible and closed the account to future charges. However in most instances, the creditor may still do the following:
- attempt to collect the debt on its own
- place the debt for collection with an outside collection agency
- sell a debt to a debt purchaser assigning the right to the debt purchaser to collect the debt
- hire an attorney to make collection efforts including filing a lawsuit (provided the debt is still within the applicable statute of limitations to file suit.)
Below are links to what the three major credit reporting bureaus have to say about charged-off debt:
If you are receiving collection calls or have been sued by a creditor or debt buyer attempting to collect a charged off debt and you have questions or need legal representation, contact us for a free case evaluation.