Collectors Collecting "Charged-off" Bill
Q: I had a bill from a three years ago that was charged off by the creditor. I
have just recently received a statement from a collection agency stating that
they want to settle the dispute with a compromise agreement, or allow me to
make payments. Is this a scam or what? I was under the impression that if a
company did a charge off, that they regarded the bill as not worth collecting,
and thus took a tax writeoff for it. Does the collector have a legal bases to
pursue collection?
A:Yes. Collection Cos. purchase old accounts receivable for pennies on the dollar
, and then go out and try to collect. The seller, your creditor, would be
obligated to report the income from the sale of old charged off accounts as
income. But whether it does or not is between it, its accountants, and the IRS.
Your credetor's internal accounting procedures and its compliance with the tax
laws does not affect your obligation to pay a just debt
There is a moral distinction between the compromise of debt
which is disputed in good faith and one which is discounted
by the creditor simply because the debtor resists collection.
But that distinction may exist only in the secret recesses
of the minds of the parties. I'm going to suggest that a
creditor who, having given up his right to sue on a debt
by a legally enforceable accord and satisfaction, threatens
to report adverse credit information in order to collect the
legally barred balance, acts at his peril. The precise facts
are going to determine the precise peril. Compromising
for less than THEY SAY you owed is not necessarily to
your discredit, and it depends on exactly what representations
they [threaten to] make that suggests that it is
What he said is that if the creditor and the