An Amex PIF account showing as charge off

[BallBounces]

The subject is an Amex card which appears on all 3 reports as Charged Off, 600 balance, closed.  

Facts:

The card in question had a $620 balance 2 weeks ago. It was visible normally via American Express on line.

A payment of $20 was made to the card, via the normal online account payment method (two weeks ago). This was a test.

The card was paid directly to American Express, using the standard American Express login for the card.

A week went by to see if the account balance updated.  It updated to $600.  (And apparently the updated balance went to the CRAs)

The card in question was PIF (one week ago). 

The card was paid directly to American Express, using the standard American Express login for the card.

The balance on the same standard American Express online statement now says $0.

Question:

Since American Express is the OC, and Since American Express accepted and applied the payments, and since American Express shows a 0 balance, how can this be listed as a charged off account?

[dynamicvb]

Was the account delinquent or charged off before the payments! Paying a charged off card does not reset the status to good standing or even closed. I’m sure they will update the balance on next reporting cycle, but if it was charged off that part won’t change just because it’s paid.

[KJinNC]

I don't know the answer, but I have a situation that's similar in some ways, with the added factor that the item was charged off in 2016, and when I first realized this in 2019, I paid it ... and they accepted payment as normal, and marked the item paid/$0 balance. It was a utility company. The debt never moved to a collection company. Can a company charge something off in 2016 (I guess reducing tax bill for that year) and then accept payment in 2019?

[Anonymous]

A charge off just means that enough time passed that they gave up trying to collect on it, it’s still a debt that you owe to them. They don’t have to sell the debt to take a charge off, a charge off just writes the debt off internally as a loss. Once paid, it remains a charge off and gets updated to paid. 

[BallBounces]

Yes, it was obviously charged off prior to payment being sent.

I am not asking if the amount was owed. It was.

I am not asking if they will update it to 0. They will.

I am asking if there are grounds to dispute them reporting it as a charge off -rather than a standard PIF, closed by grantor - since they collected as the OC via the normal means of payment.  When they have a charge off, they are writing the debt off.  Therefore, I assume there are stipulations for them to accept the payment that might require them to not categorize it as a charge off.  Obviously, it is beneficial to have a closed account listed as PIF, closed by grantor instead of PIF, Charged off.

[BallBounces]

@KJ, obviously they CAN, as we each show.

The question is whether they can keep categorizing it as charged off if they have received full payment and never sold the debt.

They likely can.  The next question will become, does the situation help the attempt at GW at all.....

[KJinNC]

I think we have some facts in common (charge-off paid to original creditor) and then we each have an odd detail that is different (you: you paid as normal and they seemingly pronounced it a charge-off at or simultaneous with payment; me: I am not sure it's really legal to write off a debt in 2016 and accept payment for it in 2019).

I think GW letters are the way to go in both cases, though. I have started my GWL saturation campaign. First batch of five letters went out in the mail today. I have another stack of letters printed next to my computer right now that I'll mail on Thursday or Friday.

[RobertEG]

A charge-off is an accounting measure that is taken by a creditor that moves the delinquent debt from the accounts receivable (i.e., assets) column of their ledger over to a non-asset (bad debt) column.  It is usually a requirment of federal regs, with the intent to prevent the creditor from overstating its "real" assets to shareholders and potential investors.

Once taken, it is a fact of business life.

If the debt is subsequently paid, the current status is updated to a new, non-delinquency status of Paid, but CRA reporting codes permit the creditor to append the special comment of "Paid, was a charge-off" to inform others that the debt was, at some prior point in time, subject to that accounting measure. See current status code 64.

Additionally, the CRAs also permit creditors to alternately report prior payment history status as either days delinquent (e.g., 90-late) OR as CO if the creditor has also taken a charge-off.  Those prior payment history profile showing of CO are not removed upon payment of the debt, as it accuartely reflects delinquency status for that prior month.

Thus, while paying a debt that was previously subjected to a charge-off does result in a new non-deliinquency status of Paid, it does not remove the showing in the creditor report of prior CO status, or the ability to append to the Paid status the additional special comment that it was a charge-off.

[Anonymous]

"While a charge-off is considered to be "written off as uncollectable" by the bank, the debt is still legally valid, and remains as such after the fact. The creditor has the right to legally collect the full amount for the time periods permitted by the statutes of limitation based on the location of the bank and where the consumer resides."

The reason the banks "charge off" debt is because they, too, have to report their income as a business. When they "charge off" your debt, it is no longer seen as profit (in the form of the interest you pay) but as a loss they're most likely not going to recover. This doesn't mean they aren't allowed to pursue it. The money is still theirs. You still owe it to them. 

A charge off also works just like a collections. Even when it's paid off, it can stay on your credit report for up to 7 years.

[KJinNC]

My question is one of tax accounting. I have studied accounting a bit. I have not studied tax accounting or tax law at all. I am just surprised it is kosher to take a tax write-off and then at a later point receive the revenue. Perhaps you simply count it as revenue in the year received and it all comes out in the wash. Somewhat moot since I already paid and I am doing GWL instead of disputes.

I think everyone on the thread is aware that paid charge-offs and collections stay on your report and that debts can still be collected after charge-off.