Do You Owe Debt That Has Been Charged Off?

When I am meeting with clients, I often get asked the following question “Do I still owe the debt on my credit report that is listed as charged off?”

Unfortunately, the answer is “Yes” you still owe old charged off debt.

Charging off a debt is an accounting practice meant to give a fair picture of the value of a business.  The credit card company or medical provider or loan company, etc. is in essence taking their bad debt off their books.  Charging off an account does not affect the legal obligation to pay the debt.

Most business will later decide to sell your debt to a debt buyer and they must then account for any money they obtained from that sale.

Now there is sometimes a long gap of time between the time your debt is charged off and when a debt buyer emerges to contact you for payment.

For all you “Walking Dead” fans, in some circles this is called “Zombie Debt”.  You think the debt is gone or dead, but then it resurrects and attacks you.

But, the (possible) good news is that gap is sometimes too long, and the debt too old, to make it collectible in a court of law.  Just because a debt is sold to a debt buyer, it doesn't mean that the statute of limitations revives if it has already lapsed.

Generally the statute of limitations in Alabama for most debts is either three (3) years or six (6) years.  That time runs from the date of the original default or last payment or last transaction date.  If you make any partial payments later, this will usually re-start the clock, so don’t make the mistake of sending the debt buyer a payment if you don’t want the statute of limitations to start all over again.

At Bond & Botes, our affiliated offices offer free initial consultations.  If you are unsure of the statute of limitations on your debt or have any questions about your charged off debt or zombie debt as it is sometimes called, feel free to call one of our conveniently located offices to set up a private consultation with one of our experienced attorneys.  We will analyze your situation and help you to make the best decisions possible to help you eliminate that debt once and for all.