Clients who are preparing to file bankruptcy often tell me that many of there debts are "charged off", thinking that they don't owe them any more, and ask me if they still need to file bankruptcy. Let's take a look at that.

When companies "'charge off" an amount owed to them, it's an accounting procedure that allows them to declare it as a loss on their financial reports.

It does NOT change the fact that the amount is still owed. Your charged-off debts are still owed and can be collected in a number of ways. Most commonly, they can be sold to collection agencies who can sue you for them.

So it really doesn't change anything, except to make it more likely that you will be sued for those debts. Which is all the more reason to go ahead and file bankruptcy.

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