Charge-off or “Profit and Loss Write-off” means that an account became more than 6 months past due. At that time the Creditor has the right to recover their losses by further collection activity such as a lawsuit or sending the account to “collections.” When this happens, usually the collector is only collecting on behalf of the original creditor and did not purchase the debt. And although these 3rd party collectors are under the restraints of the Fair Debt Collections Practices Act, FDCPA, the collectors are often rude, pushy, nasty and make statements that are untruthful in order to coerce a payment from debtors who are already stressed and struggling.
Creditors will often make the absurd statement that the sheriff or police will come put the debtor into jail for non-payment of their debt. In almost all cases, debtors will NOT go to jail for non-payment of debt. Debtor's prison was eliminated long ago. There are some limited exceptions:
- Non-payment of a fine, penalty or restitution in a CRIMINAL CASE.
- For willfully passing bad checks on an account that the debtor knows has insufficient funds or on a closed account. (Note: Also a CRIME)
- Non-payment of child support. Notice, however that a Judge will tell you that the debtor is not going to jail for non-payment of support, but for willfully disobeying a Court Order. Notice on the flip-side of that in a Judgment on a Civil case (when the creditor sues you for payment) the Judge does not order that the Debtor pay the Creditor, but that the Creditor is entitled to the money judgment. The Debtor cannot be held in contempt for non-payment of the debt since the Judge did not order the debtor to pay it. After the Judgment is rendered, the Creditor may “execute” the judgment by garnishing wages, garnishing a bank account, filing the judgment as a lien on real property, or by a general execution which would allow the creditor to take and sell assets to pay the judgment amount. Helpful Hint: The instructions on the back of a “notice of levy” instructs the debtor to go to the Sheriff's office and to claim exemptions that the debtor is entitled to in order to keep or get back certain items.
The long and short of it is that Civil Collections, that is, where a creditor is suing the debtor for a money judgment will not result in jail time, but will often result in other undesirable consequences that you may want to avoid. The Creditor cannot garnish your wages, by the way, unless they have an Order signed by a Judge. Helpful Hint: If you are sued, go to Court, ask for a continuance to delay the entry of a Judgment long enough to file your Bankruptcy case.
We want to take the stress out of your life. Let us get the creditors off your phone.