Re: BOA charge-off help PLZ
10-02-2012 01:35 AM
When a creditor charges-off debt, it does not in any way relieve the consumer obligation for the full debt, and does not preclude them from continuing to collect the full delinquent debt.
The "write-off" is within their accounting ledger, which shifts the debt from an unreceived asset to an uncollectible bad debt, thus decreasing their net assets.
At the time they took their internal accounting measure, the amount of the bad debt was apparently $4650, which is reportable as the amount charged-off.
If and when the uncollected debt balance is reduced, presumably by payments from the consumer, they must update the remaining balance in their reporting, but the original amount charged-off is retained in its own, separate code.
That is all standard. However, what becomes confusing to me is that you state you never made any payments, and yet their reporting of remaining balance somehow mysteriously declined to $800. So they apparently exclused $3850 somewhere along the way, and reported that fact to IRS, who wants taxes from someone on the entire debt. Erog, the 1099c seeking the taxes on the excused debt from you, the consumer.
That means, at least as I understand their actions, that they are still attempting to collect a remaining debt of only $800, not $4650.....so not surprising they will accept your offer.
If you were to pay $800, then their excusing of the remainder, as evidenced by their 1099c reporting, would mean it would be a payment in full, and not a settlement for less.