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New Member
Posts: 9
Registered: ‎06-21-2012
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Chargeoff Not a Chargeoff

Bank reported a loan as a "Chargeoff" because two payments were late.  Made every payment for ten years and still making every payment by autodeduct.  Legal definition of a "Chargeoff" is "Uncollectable".  CRAs won't remove it and neither will the bank.  Lawyers tell me a creditor can report a Chargeoff any time they want.  ?????????

Super Contributor
Posts: 9,668
Registered: ‎01-28-2010
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Re: Chargeoff Not a Chargeoff


Javelina wrote:

Bank reported a loan as a "Chargeoff" because two payments were late.  Made every payment for ten years and still making every payment by autodeduct.  Legal definition of a "Chargeoff" is "Uncollectable".  CRAs won't remove it and neither will the bank.  Lawyers tell me a creditor can report a Chargeoff any time they want.  ?????????


A charge~off is simply an accounting term, that marks a debt as being written off on their books.    It does not prevent a debt from be reported to the CRAs or from it continuing to be collected on.

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
New Member
Posts: 9
Registered: ‎06-21-2012
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Re: Chargeoff Not a Chargeoff

So what you're telling me is that a lender can report your loan "Charged off" to the CRAs, which appears to the user of the reports as Unpaid, at any time, whether the loan is current or not?

Super Contributor
Posts: 9,668
Registered: ‎01-28-2010
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Re: Chargeoff Not a Chargeoff


Javelina wrote:

So what you're telling me is that a lender can report your loan "Charged off" to the CRAs, which appears to the user of the reports as Unpaid, at any time, whether the loan is current or not?


Charged~off doesn't mean unpaid.   It just means that the debt was written off by the creditor.    It can be either paid or unpaid after the fact that it was CO'd.

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
New Member
Posts: 9
Registered: ‎06-21-2012
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Re: Chargeoff Not a Chargeoff

It is listed as a derogatory item on my credit report.  Creditors interpret it a a default.  So why should I keep paying the loan?

Super Contributor
Posts: 9,668
Registered: ‎01-28-2010
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Re: Chargeoff Not a Chargeoff


Javelina wrote:

It is listed as a derogatory item on my credit report.  Creditors interpret it a a default.  So why should I keep paying the loan?


It is a default/derogatory item.   If you look at almost any loan contract or CC agreement they can consider you to be in default anytime you miss a payment and can probably demand payment in full or even charge~off the debt.

 

You still owe the debt regardless of what the creditor does with it on their books.   If you don't pay they'll just sic collection agencies on you, or possibly sue.

 

I'm not trying to sound "preachy", I have had CO'd accounts before as well.     Have you tried talking with them and asking if they'll goodwill some of your late payments or do anything to help ?

 


 

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
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Registered: ‎08-04-2007
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Re: Chargeoff Not a Chargeoff

[ Edited ]

Javelina wrote:

It is listed as a derogatory item on my credit report.  Creditors interpret it a a default.  So why should I keep paying the loan?


Because they could sue if within the SOL of your state, or sell the debt to a CA who can then report and/or sue.

 

Ditto on the CO definition. A creditor can CO the account whenever they want, though traditionally it's 90-120+ days out from the first missed payment. There are some examples in here of car lenders charging-off car loans just after 30 days, which usually involves the lender calling in the loan after an auto accident.

 

ETA...slow typer Smiley Sad

New Member
Posts: 9
Registered: ‎06-21-2012
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Re: Chargeoff Not a Chargeoff

Oh, I've talked, threatened, begged, prayed.....no, they are maliciously adamant.  It was 2 months late 5 years ago.

New Member
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Registered: ‎06-21-2012
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Re: Chargeoff Not a Chargeoff

Doesn"t a CO lower your score more than 60 days late?

Super Contributor
Posts: 9,668
Registered: ‎01-28-2010
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Re: Chargeoff Not a Chargeoff


Javelina wrote:

Doesn"t a CO lower your score more than 60 days late?


I would assume that a CO would have a more severe FICO scoring penatly associated with it than a late payment, like 30, 60, days...etc... But this is just my guess, unfortunately I'm not privy to the inner workings of FICO scoring.   Smiley Wink

 

Also remember that over time the FICO scoring ding for lates and even COs will diminish to some extent.    YMMV.

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX

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