Target Charge Off

Anonymous · ‎09-15-2016

Last Aug/Sept my husband was delinquent on his Target card so he called to settle a payment. The card was already closed for about a year at this point. Now a year after settling payment the have marked the account as charged off.

At this time he evens has a new cc with them.

Is this allowed? Any advice?

Anonymous · ‎09-15-2016

@Anonymous wrote:
Last Aug/Sept my husband was delinquent on his Target card so he called to settle a payment. The card was already closed for about a year at this point. Now a year after settling payment the have marked the account as charged off.

At this time he evens has a new cc with them.

Charge off often get reported long afte they acutually occur. Nothing improper or unusual about that. A company is required to chrge off an account after 180 days delinquent, but reporting the charge off on your reports is not legally required.

Anonymous · ‎09-15-2016

So they can report it as a charge off after agreeing to a settlement?

RobertEG · ‎09-15-2016

The issue is whether or not they did a charge-off, not when it is reported to a CRA.

If the debt was delinquent at the time they did that accounting measure, it was likely proper.

Anonymous · ‎09-16-2016

Ok the account was only at the most 90 days past due.

When we settled the payment in August 2015, August was and still marked as 60 days late.

But for Sept 2015 to July 2016 it is marked as CO and Aug as CLS. They marked it as a charge off after we settled and for the dates after we settled. We closed the account back in 2013.`

The status on the credit report says paid in settlement and the comments state a Paid in full for less than full balance.

Anonymous · ‎09-16-2016

@Anonymous wrote:
So they can report it as a charge off after agreeing to a settlement?

If they agree to a settlement for less than is owed, then by definition, the difference is charged off.

RobertEG · ‎09-16-2016

A charge-off is an accounting measure that moves a delinquent debt from a receivable asset to a non-receivable bad debt.

If you did a settlement for less, then the difference is not by definition subject to a charge-off on that basis. It is cancelled debt which, if $600 or more, is subject to reporting to the IRS as cancelled debt.

A charge-off requires the ability of the creditor to make the determination that the debt is not likely to be paid (in accounting language, it has become "uncollectible").

Federal banking regs control when a debt can be considered to have become uncollectible. Prima facie requirements kick in at 150 days for installment loans, and 180 days for revolving credit. Additional definitions relate to earlier charge-offs based on additional information supporting a conclusion that it is unlikely to be paid.

To charge-off a debt at 60-90 days delinquency would require some exceptional reason supporting a determination that the consumer is not going to pay the debt.

It has not yet reached the normal regulatory delinquency period. I would request their rationale for having declared the debt as having reached the defintion set in federal regulations for taking a charge-off.

Anonymous · ‎09-16-2016

Last Aug/Sept my husband was delinquent on his Target card so he called to settle a payment. The card was already closed for about a year at this point. Now a year after settling payment the have marked the account as charged off.

_______________________________________

Ok the account was only at the most 90 days past due.

When we settled the payment in August 2015, August was and still marked as 60 days late.

____________________________________________

If the account had been closed for a year then it had to be over 60 days past due. They probably didn't report it 360 days past due--I've never seen that before--but they are reporting the status at charge off, which was 60 days past due (multiple months in a row).

Anonymous · ‎09-16-2016

@Anonymous wrote:
Ok the account was only at the most 90 days past due.

When we settled the payment in August 2015, August was and still marked as 60 days late.

But for Sept 2015 to July 2016 it is marked as CO and Aug as CLS. They marked it as a charge off after we settled and for the dates after we settled. We closed the account back in 2013.`

The status on the credit report says paid in settlement and the comments state a Paid in full for less than full balance.

Also another thing to consider is that Charge Off is required at 180 days, but they may make the decision to charge off an account any time after its intial delinquency.

RobertEG · ‎09-16-2016

Federal banking regs define when a creditor may charge a bad debt to profit and loss.

They must have reasonable basis for reaching the determination that the debt has become "uncollectible."

While reaching 180 days late is prima facie basis for making that determination, if they make that determination at an earlier point in time, they must have a basis for additionally reaching the determination that it has also become "uncollectible."

Delinquencies of 30 or 60 days are very rarely basis for making the determination that the consumer is not going to repay the debt, and thus permitting them to remove the asset from their accounts receivable ledger and claim it as a tax writeoff as an uncollectible bad debt.

Were their additional, mitigating circumstances, such as repetitive prior account delinquencies, that might support their ability to hold the debt to have legally become uncollectible?