Will LO ask for proof that Charge Offs have been paid?

[tsever01]

When applying for a mortgage will the LO ask for proof that charged off debts have been paid?  For example, I had a credit card that was charged off when I lost my job and it was sold to a CA.  I paid the CA and my credit report reflects that as paid but the original creditor still shows as Charged Off.  Another credit card was charged off but I have never been contacted by a CA about the debt and it has not shown up on my credit report so I have not paid it.  Will I need to proactively track down the current owner of my debt and pay them before applying for a mortgage?

[MissMia75]

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@tsever01 wrote:

When applying for a mortgage will the LO ask for proof that charged off debts have been paid?  For example, I had a credit card that was charged off when I lost my job and it was sold to a CA.  I paid the CA and my credit report reflects that as paid but the original creditor still shows as Charged Off.  Another credit card was charged off but I have never been contacted by a CA about the debt and it has not shown up on my credit report so I have not paid it.  Will I need to proactively track down the current owner of my debt and pay them before applying for a mortgage?

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tsever01~ If I am not mistaken if the OC has sold your debt to another company then the CO from the OC should read $0 balance.  As a result, I do not believe they would want nor require proof that the CA if your credit reports shows that the CA has been paid.

[tsever01]

You are correct.  The Charge-off does show a $0 balance.  Thanks for the response!

[MissMia75]

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@tsever01 wrote:

You are correct.  The Charge-off does show a $0 balance.  Thanks for the response!

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LOL, no problem!

[RobertEG]

+1

A CO is a one-time event, reflecting a bookeeping action taken by the creditor at that time.

It will stay in your CR, but its appearance does not reflect the actual, later payment status of the debt.

If the OC has reported a $0 balance, that is their statement that no debt is still owed to them.  Their statement of $0 balance has zilch to do with the fact that it had been previously charged-off.  It could mean two things: either you paid them, or they sold the debt.   In your case, they sold it.

Once the debt collector purchased the debt, their reporting under their collection then reflects BOTH the amount they are collection upon and the amount of debt owed to them.

If the debt collector then reports a $0 balance,that is their statement that no debt is still owed to them.