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Home equity loan is listed as "charged off as bad debt/profit and loss write off" by original creditor, will they still pursue?

Cape Coral, FL |

House was foreclosed in FL and 2nd mortgage listed as "charged off as bad debt/profit and loss write off by original creditor, can they still collect on debt? Has been bouncing around from 3rd party collectors for 2+years, but we have no money to pay. Struggling to make it pay day to pay day, robbing Peter to pay Paul. Have been offered 10cents on $ to settle. Sounds good but still don't have $. Is there time limitation they can collect? Only thing in our name is a car and we are still paying on it. In future, some family land in another state is to be handed down to me,can they touch that?

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Attorney answers 4


"Charge off" is a term that people believe means "written off," but it only means that the debt hasn't been paid for more than 6 months. It is not a reflection of the creditor's intent to collect the debt & it doesn't mean that the creditor has taken the debt as a tax write off. From the perspective of your credit score, it simply means "seriously delinquent debt!"

When a debt becomes very old, you may be entitled to defend the collection of the debt under a type of law known as "statute of limitations." These laws vary widely from state to state & you can review the law in your state for more specific information. Most states now post their laws on the state website.

Hope this perspective helps!


My experience is the term "charged off" simply means that they are not currently seeking active collection of the debt. The debt is not cancelled or released. Prior to the expiration of the applicable Statute of Limitations the creditor may still file a lawsuit to convert their claim to a Judgment which is then enforceable for 10 years and then an additional 10 years by re-recording. The inheritance of land would be a non-exempt asset which could be reached by a judment creditor. You should consider bankruptcy filing to discharge this debt and prevent a possible court judgment. By doing this, any inheritance received at least 180 days after the bankruptcy was filed would not be subject to discharged creditors' claims.


As noted above, the lender can still sue you for the debt. In order to eliminate this debt, as well as other debt, you may want to consider filing for bankruptcy. My firm has offices in your area, and I would be happy to meet with you to discuss it. It is a free consultation.


A "charge off" is usually a provision of an IRS rule that allows creditors to charge off debts that are unlikely to be paid. The creditor can take a loss for income tax purposes. When a creditor fails to collect an outstanding debt, it has to account for the loss. It doesn't mean the debt is forgiven. Once a creditor charges off a bad debt, it can still pursue collection and eventually it will sell the debt to a third party collector. The Fair Reporting Act demands that the debt be removed from your credit report seven years from the date of the charge off. So the term charge off is important to all parties involved.

What that means to you is that the debt remains active and a debt collector can sue you to collect provided it is filed prior to the applicable statute of limitation.

A lawsuit can become a judgment which is recorded where you reside. The debt collector can try to collect on the judgment by garnishing your bank account, wages and including title to non-homestead property which are not exempt from the reach of a judgment creditor.

Bankruptcy will protect you if the debt collector files a lawsuit or even before that happens. However, no creditor can force you to pay, throw you in jail or garnish your wages without first filing a lawsuit.

I hope this helps you. Good luck