Re: Three charge-off Questions

Posted by Will (68.106.21.79) on November 14, 2003 at 22:44:45:

In Reply to: Three charge-off Questions posted by JudieSoon on November 14, 2003 at 21:51:13:

Yes, accounts are sold all the time. If you have a performing account, some other creditor can step in and assume your account. If you default, and you appear to be 1 step away from bankruptcy, they can and do charge off the accounts and sell them at 90, 120, and 150 days. They get more money from debt buyers that way than waiting the full 180 days.

Charge off is an accounting term. Creditors were misleading their investors by carrying non-performing loans on their balance sheets for 210 months to a year or longer, so federal regulators stepped in and forced them to charge off defaulted accounts at 180 days so as not to mislead their investors over the true status of the loans on their books.

Your account can be charged off any time after default if the creditor views it as a lost cause. The standard is they wait for 180 days. They can do it sooner. They can’t do it later.

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