That's a common question that people ask me when they contact me to discuss bankruptcy. The short answer is "No". We'll look at why that is so in this article.
Credit card companies "write off" or "charge off" debts after they've been behind in payments for a certain amount of time. It's an internal accounting action and allows the company to deduct the loss as an expense. That's not exactly correct accounting-wise, but it serves the purpose here. It does NOT mean that you don't continue to owe that debt.
What will the credit card company do after the write off?
The company can continue to attempt to collect the money, but usually they they don't. Instead, they might hire an external collection agency to keep trying to collect.
If that fails, the bank may sell the debt to a debt buyer whose business is to collect that debt from you. They bought the debt very cheaply, so they can afford to sue you to get the money from you. If a court enters a default judgment against you, which will happen if you don't file an "answer" on time, the debt collector can then garnish your wages or tap into your bank accounts.
What should you do?
• Filing bankruptcy stops all creditor actions against you, including lawsuits. And if your bankruptcy proceeds to a successful discharge of your debts, that debt (and others) is gone for good.
• If for some reason filing bankruptcy isn't a good thing for you at this time, if someone sues you for a debt do NOT just sit and do nothing. File a proper "answer" in the time allowed. If you need help with that and you're in California, contact me and I'll refer you to an attorney who will help you with that process.
What's the take-away?
Just because your debts have been written off or charged off doesn't mean you won't be sued for them. In fact, that may be more likely than before. To explore all the possibilities, contact an experienced bankruptcy attorney sooner rather than later.
A creditor is suing me! What should I do?
Wait until you're sued to file bankruptcy, or file earlier?
A creditor is suing me! Should I file bankruptcy?
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