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Credit report shows a zero balance. Am I debt free?

Tewksbury, MA |

I'm thinking of filing for bankruptcy. When I pulled my credit report, I found out that almost all of my debts have been written off and showing a zero balance. Does that mean I'm completely free of this debts and no longer have to file for bankruptcy?

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Attorney answers 4


A write off usually means that your account has been sold to on the secondary debt market. There are a variety of companies that purchase large portfolios of written-off debt for pennies on the dollar, gambling that they will be able to collect some percentage of those debts that is greater than what they paid for it. Depending on who purchases your debts, you may be able to negotiate payment of a lower balance than the face amount.

So this is good news and bad news, really.

Good - No your debt isn't gone, but you might have a little bit of time to restructure your finances while it gets repackaged, valued, auctioned off, and the new owner gets their house in order before they try collecting.

Bad - You don't know who will end up owning your debt. There are good guys and bad guys in the secondary debt business, and some of the bad guys are real bullies. Some of the bad guys are not licensed to collect in the Commonwealth, and will either do so (and ignore a lot of the rights you have under MA law) or skip that part and just hire an attorney to sue you for the debt. Some of the attorneys who work for the bad guys are just as bad - it is very important to take good notes, and no matter what is said on the phone insist on every promise or understanding being repeated in writing.

Good - A transfer of ownership of your debt gives you a fresh opportunity under MA law to audit the debt: by demanding copies of documents, including the original loan agreement, proof of assignment, and most importantly a ledger of credits and charges to the account so that you can go over it and see if there's anything you'd like to challenge. THIS DEMAND MUST BE MADE IN WRITING WITHIN 30 DAYS OF FIRST BEING CONTACTED BY THE NEW OWNER (or their attorney).

Bad - You will still probably be hearing from someone about this debt eventually. Sometimes this can be in the form of a lawsuit. If you've moved, or if you were not receiving regular statements at your current address from the originator of the loan, be particularly wary as service is sometimes made to the wrong address. Make sure your forwarding information is registered with the post office and check your credit report regularly for new creditors adding themselves to the list (don't depend on this, however - secondary creditors are not actually permitted to report purchased debts in their own name, though many do so anyway).


You should use the Find Lawyer tool on Avvo and find a BK attorney in your who offers a free consultation. A debt that is charged off does not mean you are debt free. Someone still owns the debt. You need to have a trained party who understands credit reports look over yours.


Do you currently have creditors calling you or taking you to court? If not, wait and see if you really need to file bankruptcy. It might eventually improve your credit report to file, but also hurts your credit in the short term. As the other attorney said, charged off is not the same as not owing. But the $0 balance is usually pretty trustworthy. You may be okay.

Henry Lebensbaum

Henry Lebensbaum


It is not what the credit report says, it is what the creditors say. Your analysis is wrong.

Michael Christopher Burr

Michael Christopher Burr


In my experience, if the credit report say $0 balance, the creditor is saying no debt owed whereas a chargeoff is still an obligation. You should be less of a troll and offer some insight into into the question.


A bankruptcy attorney would be able to give you a more definitive answer based on your specific financial situation. While an entry on your credit report would seem to be evidence of a loan balance, it is not the sine qua non of legal responsibility for a debt. For example, you could theoretically have a legal obligation on a debt that is never reported to your credit report. You could also have an erroneous entry on your credit report for a debt which you have no obligation to pay.

The real question is whether you have a legal obligation to repay the debt, and an attorney can assist you with that. Good luck.

Christopher Vaughn-Martel is a Massachusetts lawyer with the firm of Vaughn-Martel Law in Boston, Massachusetts. All answers are based on generalized Massachusetts law and the limited facts presented by the questioner. All answers are provided to the general public for educational purposes only and no attorney-client relationship is formed by providing an answer to a question. If you would like an attorney with Vaughn-Martel Law to review your specific situation and provide you with legal options or information specific to you, you may schedule a telephone or office by calling 617-357-4898 or visiting us at Our office charges $100.00 for a consultation, and applies your consultation fee to your first bill if the Firm is hired to perform further work.

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