Monday, November 28, 2016

What's The Difference Between A Charged Off Debt And A Debt Discharged In Bankruptcy?

The purpose of filing bankruptcy is to get a discharge of the debts you are not able to pay. When a debt is discharged in bankruptcy, it is no longer considered due and payable. This is helpful because when you don’t have as many monthly payments to make, you are able to focus your funds on the payments that remain. For many people this means they are now able to pay the house and car payment, and buy groceries for their family because they no longer have to worry about making payments to credit cards and other unsecured debts. Bankruptcy can also result in paying less for your car, which also puts more money back in your pocket.

But there are a lot of questions about how the discharge works, and how a debt discharged in bankruptcy is different from a charged off debt. Here’s how it works:

         A bankruptcy discharge is a legal notation that the debts contained within your bankruptcy are no longer due.
         A debt that a lender has charged off is still due, it is just no longer showing on the lender’s books.
Many charged off debts are sold, and if any activity towards collection takes place within the legal timeframe to do so, you may find yourself paying back a debt that you thought was no longer lingering. The reason lenders decide to charge off a debt rather than try to keep it alive long enough to collect is largely for paper purposes, because when a debt is charged off the books it no longer brings down the total bottom line on that lending institution’s balance sheet. And, if your lender can sell the charged off debt and make a little, the balance sheet improves all the more. The key is to make sure that any efforts at collection of charged off debts falls within legally acceptable time lines. In order to make this determination, call our office for help. We will review your case and let you know what choices you have, and what will work best to help get you out of debt.

For more information about bankruptcy and how to manage debt, call us today or reach us online at We will help by coming up with solutions that work for you and have multiple locations for more convenient one on one office visits.

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