03-17-2012 03:10 PM
Im confused I thought that a account can only show as a chargeoff if they didnt sell the account to a collection agency. So I have a charge off from capital one on my report as well as a collection from the same account is this legal? Im sure Im taking a point hit on this.
03-17-2012 03:25 PM
03-17-2012 03:37 PM
A charge-off is a business accounting measure that reflects the creditor's statement at that point in time that the bad debt is now considered "uncollectible."
They can thus move it from a receivable (taxable) asset to a business writeoff.
The subsequent status of the debt is irrelevant to the fact of the CO. If the OC laters collects some of the charged-off debt, they reconcile that with the IRS in their accounting of receivables.
The entire amount of the charged-off debt is still due to the owner, and they may pursue collection of the entire amount, as long as they still own the debt.
As far as the consumer is concerned, the act of a prior charge-off has no effect on the full debt, or the authority of anyone to continue to attempt to collect it.
If a debt collector becomes involved, either as an assignee of the creditor or the owner, they are entitled to collect on the full amount, and report those collection efforts to the CRAs. The owner reports the debt owed, and the debt collector reports the debt they are collecting upon. If the debt collector buys the debt, their reporting reflects both.
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