topic Re: Bad debt profit and loss writeoff question in Rebuilding Your Credit

Bad debt profit and loss writeoff question

Anonymous — Wed, 06 Sep 2017 02:44:48 GMT

Hi All. I am hoping someone can provide some insight as I have searched the web and came up empty. I had a car loan through a CU a while ago. It was charged off as bad debt and listed as profit and loss write off on my credit report. In June, I paid it off completely - interest and all. It is still listed as P&L on my report. Also, the CU has not updated the balance to show $0. Instead, for the past three months they have listed a payment posted to the account. As of now, it still states the balance is $1300 - which is not true. I have the paid in full letter from their attorney. Is this legal to post monthly payments? Can they keep the P&L on my CR when it is actually a profit now?

Re: Bad debt profit and loss writeoff question

RobertEG — Wed, 06 Sep 2017 16:47:43 GMT

A charge-off is taken and reported once the debt has been determined as not likely to be paid.

It is moved from the receivable assets column of their accounting ledger to a non-receivable column, and thus becomes excluded from companay assets.

If the debt is later paid, the fact that it was previously charged-off is not negated, and the reported charge-off is not removed from the consumer's credit report.

They must, however, promptly update their reporting to show the debt balance to be $0 and the current status to be paid. FCRA 623(a)(2).

It is common to first report updated payments before zeroing out the debt and updating the current status to paid.

One reporting period is usually considered as "prompt."

You can dispute the lack of prompt update by filing a dispute. However, the creditor can simply update the balance to $0 and the current status to paid in resolving the dispute. The dispute will not require removal of the charge-off, and often a dispute may act contrary to later efforts to request good-will removal of the charge-off.

If removal is the charge-off is the primary goal, I would give them time to update their reporting before filing disputes.

Re: Bad debt profit and loss writeoff question

Anonymous — Wed, 06 Sep 2017 13:41:38 GMT

Thanks for your reply