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What does "Charge Off" mean?

Asked Jan 30, 2007, 09:06 PM — 2 Answers
A collections/attorney firm filed for judgement against me. It had been in the hands of another collections agency before this attorney. When I called the first collections agency, they told me the debt was "Charged Off" . That it was sent back to the original creditor. When I called the original creditor, (he CC Company) they would not talk to me and kept sending me into an automated voice system for some "Attorney something Network". I left messages there and got nowhere.

What exactly does "Charged off" mean? That they sold the debt and took a tax deduction? Can anyone tell me the difference between Assignment, negotiation or Novation?

Thanks.

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excon's Avatar
excon Posts: 21,000, Reputation: 15460
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Jan 31, 2007, 05:32 AM
Quote:
Originally Posted by ckinganswers
What exactly does "Charged off" mean? That they sold the debt and took a tax deduction? Can anyone tell me the difference between Assignment, negotiation or Novation?Thanks.
Hello cking:

Charged off means that the original creditor is not pursuing collection. I'm sure they'll take a deduction on their taxes. Why shouldn't they, and why do you care?

You can always look those words up in a dictionery.

excon
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ScottGem's Avatar
ScottGem Posts: 58,053, Reputation: 28125
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Jan 31, 2007, 06:05 AM


Yes Charged Off, means that the debt was charged off as a loss against income for tax purposes. The debt may have then been sold to a collector for pennies on the dollar.

The WEB has many sites where you can research those terms. Sometimes context is necessary to define a term. Those three terms are very different things and really can't be compared. Assignment is when the responsibility or ownership of something goes to another party. Negotiation is when 2 or more parties agree on terms for something. Novation is when an obligation or party to a contract is replaced with a new one.
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