Profit and Loss Writeoff

[tasha27]

I have two accounts one from pioneer military loans and one from military acceptance corp that are reporting with a zero balance.  Neither one of these accounts have been reported since January 2006.  The status states charge off as a bad debt but the description states profit and loss writeoff.  I am definetly not past SOL.  My question is what does profit and loss writeoff mean?  Can they still send this account to a CA?  If I have the money would it be better to try and do a PFD to remove these accounts or just leave them alone until they fall off in 2012?  Thanx in advance for your input.

[Anonymous]

---

@tasha27 wrote:

I have two accounts one from pioneer military loans and one from military acceptance corp that are reporting with a zero balance.  Neither one of these accounts have been reported since January 2006.  The status states charge off as a bad debt but the description states profit and loss writeoff.  I am definetly not past SOL.  My question is what does profit and loss writeoff mean?  Can they still send this account to a CA?  If I have the money would it be better to try and do a PFD to remove these accounts or just leave them alone until they fall off in 2012?  Thanx in advance for your input.

---

That just means that they've written off the debt for tax purposes (which means that one day, Unky Sam *could* send you a 1099 and demand some extra taxes -- since it's considered "extra income" ).

What usually happens is that they sell the debt, for pennies on the dollar, to a collection agency (often, a junk debt buyer). If the debt was for $2K and they sold it for $1K, they claim $1K (the difference) as a profit-loss claim with the gubmint (so they don't have to pay taxes on that "extra" $1K). Then that JDB tries to get the money from YOU. They will try to get the ENTIRE balance. THEY can then sue you for the money. They can also plop that on your CRs (but not if the original debt's credit reporting time period has lapsed).

If the original creditor does NOT sell the debt, you will more than likely get that 1099c from Unky Sam. Depending on how much was "forgiven."

Did that make sense? Haven't had my morning ration of caffeine, yet. :/

Were they actual military loans (gubmint) or were those names just supposed to sound like they were? If they were really private entities (not gubmint affliated), your problems are smaller than if they WERE from actual gubmint entities.

If they originate from AAFES (or similar), then you're talking about a real-live government debt and one day, you could find your taxes offset to pay the debt -- or you might be barred from any government backed loans (FHA mortgage loan, USDA mortgage loan, VA mortgage loan, Federal backed student loans, etc).

[Anonymous]

If they are reporting $0 balance, then I'd say they've done been sold.

[Anonymous]

---

@tasha27 wrote:

If I have the money would it be better to try and do a PFD to remove these accounts or just leave them alone until they fall off in 2012?  Thanx in advance for your input.

---

If these are government-backed debts (again, like AAFES), even if they fall off your CRs, they're still owed and payable. Meaning, until they're paid off, regardless of whether they're still sitting on your CRs, you'd still be barred from government backed loans in the future.

Plus, if they're not at least 6 years old, I'd be wary of a lawsuit. Most SoLs for loans are usually 4-10 years, depending on the state, obviously. Though I've heard tell that for many government debts, there is no statute of limitations.

[tasha27]

i dont think pioneer and mac are actual govt loans they are just people who give loans only to military because we can pay through allotment.  so since this is not a govt loan would it be safe for me to call them and see if they would let me pay to keep CA's from popping up later on. 

[Anonymous]

---

@tasha27 wrote:
i dont think pioneer and mac are actual govt loans they are just people who give loans only to military because we can pay through allotment.  so since this is not a govt loan would it be safe for me to call them and see if they would let me pay to keep CA's from popping up later on. 

---

Yup, you're right. They're not gov-affiliated! I'm sorry about that ... not enough caffeine.

I'd contact them *only* if you could PIF if necessary. If you can only offer a settlement and they refuse it, it could poke the proverbial sleeping dragon with a pointy stick (AKA, make them "remember" you and the debt and file a suit).

Personally, I'd offer them a PFD if you can. Although, as SideWinder said, it's most likely that the debt was sold -- in that case, they'll refer you to whoever bought them, I'm sure. And you could offer a settlement (best-case) or PIF (worst case) in exchange for NOT reporting EVER.

Make sure to get that in writing.